Are We Cheap Yet?

One helluva weak week for the stock market.  Three of the five largest Dow point flops in history.  Yes, we have already been lectured like a little schoolboy by the Twitterati geniuses “it is the percentage drops that count.”  No shit.

Cheap?  You gotta be fricking kidding me.  Not even close.  Look at our favorite valuation metric — market cap-to-GDP.     But, interest rates are going to zero, yada, yada, yada!   That is not exactly a positive, in our opinion.

Oversold?  Yes, and the S&P finally carved out a daily green candlestick,  to close higher than its opening trade.

Staying on the beach.

Market Cap

Note the above chart is a ratio of the total stock market capitalization to nominal gross domestic product (GDP) and cannot continue to move higher forever.  It gyrates from an upper limit of extreme overvaluation to the lower limit of extreme undervaluation.

You decide where we are at.

Dow_Flops_28

This entry was posted in Black Swan Watch, Economics, Uncategorized and tagged , , , . Bookmark the permalink.

17 Responses to Are We Cheap Yet?

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