Sunday, Nov 01, 2009

Sex in the city, it ain't !

Money week: The US recession isn't over

In a nutshell, for the US, this 'recovery' looks like a false dawn. And that's not likely to prove good news for Wall Street. US shares have enjoyed a big rally recently – and jumped up sharply on yesterday's news. But that could prove to be the last chance to sell. Andrew Smithers, who runs his own research house, has no time for "those who claim that US equities are cheap", says the FT. His conclusion, after looking at both earnings and asset valuations, is very clear indeed – "US equities are 40% overvalued".

Posted by happy mondays @ 08:24 AM (925 views)
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3 Comments

1. crunchy said...

The investment markets are out of recession and will remain that way for a few years, much to most peoples suprise whilst the USA's

economy and the Feds greenback will slowly bite the dust. The cursed land indeed!

Sunday, November 1, 2009 10:23AM Report Comment
 

2. goweresque said...

As an aside, if equities are '40% overvalued', does that mean he thinks they should fall 40% from current values to get to the true value, or is the difference between true value and current value 40% of the true value, in which case they should only fall 31%?

Sunday, November 1, 2009 10:27AM Report Comment
 

3. drewster said...

With all due respect, that "40% overvalued" is just one person's opinion. There are many different ways of calculating "fair value" - whether through P/E ratios, yield over treasuries, price/book ratio, 10-year cyclically adjusted earnings ratio, Elliott waves, etc. Some investors believe that the whole concept of fair value is misplaced, and that the market is more about moods (fear & greed) than about economics.

One thing is for sure: if the market is 40% overvalued today, then not long ago it was 10%, 20%, and 30% overvalued. If you'd sold at those points (or worse gone short), you'd be kicking yourself now.

Sunday, November 1, 2009 11:38AM Report Comment
 

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