It’s Officially the Biggest Bubble in Stock Market History

in #money7 years ago

Based on the median Price to Sales for an S&P 500 company, the stock market is now officially the single biggest bubble in history.

A big hat tip to John Hussman for catching this.

phoenixcapital-de5aefa4-9097-4113-ad80-f08094e523a9-v2.png

Why does this matter?

Because, earnings, cash flow, book value, and other metrics can be easily massaged by corporates. As such, valuing a business based on its P/E, P/CF, or P/B multiples isn’t necessarily accurate.

Sales, on the other hand, cannot be fudged. Either the money came in the door or it didn’t. And if a company is caught fudging its sales numbers, someone is going to jail.

Which is why the fact that the median P/S multiple at an S&P 500 just hit an all time high is a MAJOR warning that stocks are in fact in a MASSIVE bubble.

You’ve been warned.

http://gainspainscapital.com/2017/08/08/officially-biggest-bubble-stock-market-history/

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Be afraid of the bubble, be very afraid...

The Prisoner