For those familiar with the Shiller PE (C.A.P.E.) I wanted to start a discussion. I believe it is at its second highest mark ever, albeit a distant second to its high point I think in 1999 before the .com crash. I think 1929 was its third highest point. My point here is not to discuss the merits of this ratio for market timing purposes. We all know that approach is fraught with peril. I was thinking back on those other highs we can see with hindsight the incredible amount of untethered speculation that was going on. In 1999 anything with a .com in its name had promise regardless of earnings, and in 1929 runaway speculation, sometimes 90% leveraged, was a recipe for disaster.
With that in mind I look to the current run up. Certainly the obviously untethered excessive are not present to the same extent. I wanted to get peoples thoughts on this. Can valuations be so high for legitimate reasons? On the other hand could valuations this time be equally untethered but not as obvious, such as unsustainable monetary or tax policy, artificially and not so obviously propping things up?
Just looking for comments from those who may see the Shiller Ratio or the GNP/TMC ratio and say... This time it’s different because...”.
I’m interested in the because part. Hoping this generates some good discussion.
Submitted January 21, 2018 at 09:11AM by DiggersPal1 http://ift.tt/2G3Moy8
