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Mr Magoo Says Stocks Are ‘Relatively Low’ And Headed Upward

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http://www.bloomberg.com/news/2013-10-23/greenspan-says-stocks-are-relatively-low-and-heading-upward.html

Former Federal Reserve Chairman Alan Greenspan said the stock market has room to rise from record levels.

“In a sense, we are actually at relatively low stock prices,” Greenspan, who guided the central bank for more than 18 years, said in an interview with Sara Eisen on Bloomberg Television today. “So-called equity premiums are still at a very high level, and that means that the momentum of the market is still ultimately up.”

..

Greenspan said the stock market is “just barely above 2007” and the average annual increase in stock prices “throughout the postwar period” is 7 percent, which leaves room for a rise.

“Price-earnings ratios are not hugely up,” he said. The market has “gone up a huge amount, but it’s not bubbly,” according to Greenspan.

And before the war what was the percentage increase in stock prices?

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When people are telling you it's time to invest....you've already missed out.

Forget the stock market...invest in property...you can't loose. :blink:

Edited by TheCountOfNowhere

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When people are telling you it's time to invest....you've already missed out.

And when they make a programme about it on Channel 4 - run screaming.

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And before the war what was the percentage increase in stock prices?

I posted this in another thread a week or so ago:

Those precedents were all exceptional in their time - it is entirely possible that we're only half way to a real peak.

I think S&P is on a Shiller PE of 25 at the moment, it was at 44 in 1999 - which had a previous precedent of 30 in the 1920s. it could go to 50+ before it even starts to become 'this time its different' territory.

I read something once about Soros always buying in to frothing bubbles because they usually go on for longer than consensus think possible.

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Have Channel 4 made a program about the stock market yet?

Give them a chance.

I recall one from the pre black Monday era. A few punidts and individuals. One guy who had his own software programme which said a share was a buy if it rose twice.

Why he needed a software prorgamme for that I'm not sure.

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His 'irrational exhuberance' comment was Dec 1996.

When central banksters prognosticate on asset prices you've probably got 2-3 years left in the market.

http://en.wikipedia.org/wiki/Irrational_exuberance

You'll note that they can't see any bubbles anywhere at the present time. So there's probably still quite some room to run on both stocks and houses (and possibly even bonds)

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The US stock market is pretty close to it's long run p/e ratio average, so even though it's anyone's guess where the US market might go over the next few months, in the longer term there's probably not great value to be had from today's price

The UK market on the other hand is still someway below the long run average. Share Maestro for example puts the "fair value" of the FTSE today at something like 7800 (I forget the exact number but that's not too far off), which personally I think is about right.

And if you look at some of the European markets there is outstanding value to be had.

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If the central bank lends money to other banks at 0% interest and those banks are wary about the covenant of potential borrowers and / or the value of assets that those borrowers might buy with the loan (houses, cars etc) then, lo and behold, the cheap money will find its way into equities

The US ZIRP is the main driver of higher stock prices imo

It would be easy to underestimate the ability of the stock markets to go higher

It would also be easy to underestimate the ability of the stock markets to crash very hard anytime soon - the S&P500 has delivered 2 x 50% declines in the last 10 years or so and there is no doubt it could do that again sometime

Be careful, there is always a black swan flying and, sooner or later, she might decide to land

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