Skeeter,
Bubbles imply that they will burst, I don't think this market qualifies.
Firgures from a few weeks ago: the S&P 500 was trading at a PE of 34.5% 12 months ago, now trading at a PE of about 27, in the same period the S&P was up 6.6%. The market has slowly, steadily been discounting earnings growth for almost 1 1/2 years, not the sign of a mania or bubble to me, in fact it seems to be a very rational market.
But the earnings growth of US companies is very real, and probably unprecedented. It appears that the productivity acceleration will continue (not just me saying that, Mr. Greenspan also). If so, and we continue with a flat to slightly up market, then your bubble argument doesn't hold much water.
Will the productivity gains eventually play out and the market go down, yes. Are we there now, I doubt it.
re: "inflation is statistically adjusted downward while productivity is statistically adjusted upward.
I'm not much into the conspiracy thing.
John |
