Most people on the market say that
the American stock market is overvalued and they use the Shiller-Cape-Ratio in
order to justify their comments.
Well, I say it's
hard to say whether we are in a stock market bubble but we see definitely low
yields in terms of free cash flow and high premiums on book value. It it’s a
real bubble; it is a question about how fast the future growth can develop.
For the time
being, the economy is recovering at a slow pace and the inflation seems to be
flat. This is a good environment for the FED to keep the interest rates low
which give the market more fuel.
Below are two
interesting info-graphics which I have found by stumbling the economic theme
space of the internet.
The first picture shows that it
doesn't matter if you buy in a bubble. If you buy and hold stocks for the long
period, you will make money in the end. The only difference is that your return
will be smaller or over a long period negative.
What do you think?
Would you buy stocks for bigger amounts of money? I personally keep around 15
net cash but that's in my view not an optimum when the yields for fixed income
are so low.
My thoughts go
into foreign stock markets. China and Europe stocks seem to be more fairly valuated
but if you look what's going on in Europe and China, you would think about your
investment a second time.
How do you place your
money? Please let me know if you still buy stocks. Best Tom.
Source: BizBrain.org
