Bubble Update, Part II – Yields indicate Stocks are OK, but Bonds???

The Chart below is a nice comparison of relative valuations for stocks vs. bonds. You can see in 1982 when the 30+ years Bull Market began (for both stocks and bonds) how significantly under-valued stocks were and significantly over-valued they became in 2000 at the peak of the Dot-Com boom. Since March 2009, both stocks and bonds have been doing well. Both bonds and Stocks are considered to be over-valued, but a bubble in stocks, who knows?

“Some analysts argue that we don’t have a stock market bubble because the S&P 500 earnings yield remains above US corporate bond yields.” (WSJ-The Daily Shot 10AUG2017)

Source: Capital Economics, WSJ The Daily Shot 10AUG2017

Sotheby’s (BID) Chart 09AUG2017 – down 10pct+ since July 31 when IAV first published the Bubble Indicator

Nikkei Bubble 1990 / Dot-Com Bubble 2000 / Asset Bubble 2007/08 / Sotheby’s Specific Problems 2013-15 / Now?

2 Comment

  1. […] Bubble Update, Part II – Yields indicate Stocks are OK, but Bonds??? […]

  2. Tom in the Desert says: Reply

    All of that journalistic bubble talk might be having extraordinary effects far from big financial centers and usual suspects. Here in the desert are neighbors, some in modest circumstances and some very well off indeed, who are internet savvy and who are hoarding un-invested cash because they too read bubble scare articles and remember October 1987. Some have stopped even “buying in the dips.” So everyone please now tell me all of the ways you can discover that indicate this is not the irrational exuberance that didn’t happen and hurt the Greenspan reputation in the 1990s.

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