Is the DJIA way overvalued???

Discussion in 'Economy' started by Neubarth, Nov 7, 2009.

  1. Neubarth
    Offline

    Neubarth At the Ballpark July 30th

    Joined:
    Nov 8, 2008
    Messages:
    3,751
    Thanks Received:
    199
    Trophy Points:
    48
    Location:
    South Pacific
    Ratings:
    +199
    For people who think that stocks are not overvalued right now, look at some of the P/E's. We are in a gigantic bubble in stock prices.

    Look at INTEL with a P/E of 46. A normal P/E should be ten or below. Intel is selling at four and a half times what it should be selling for based upon current earnings.

    INTC: Summary for Intel Corporation- Yahoo! Finance

    JP Morgan Chase (One of the Big Banks that is supporting the Obama Propaganda Machine) is selling for almost three times a normal P/E with a P/E of 27..... Amazing corruption in the market. Chase would be bankrupt if the FED raised interest rates to two percent.

    JPM: Summary for JP MORGAN CHASE CO- Yahoo! Finance


    Boeing (Also on the Dow Jones Industrial Average) is selling for fifty dollars a share and has negative earnings. The P/E can not be calculated.

    BA: Summary for BOEING CO- Yahoo! Finance


    Exxon Mobil (on the DOW) is selling for a P/E of 17. Amazing! It could come down in value to half of what it is presently selling for and still be a speculative buy.
    XOM: Summary for EXXON MOBIL CP- Yahoo! Finance
     
  2. Paulie
    Offline

    Paulie Platinum Member

    Joined:
    May 19, 2007
    Messages:
    31,606
    Thanks Received:
    4,856
    Trophy Points:
    1,130
    Ratings:
    +15,500
    You are right about some of those.

    But the money is on Boeing because it's defense, and investors know we're not exactly lightening up on our military escapades around the world.

    I don't know why INTC is so high. That's anyone's guess. They stayed flat at around 15-16 for a while during the spike and of late have caught on with the rest of the boom.

    Maybe investors are betting on a recovery and expect them to be a big player.

    There's nothing really that bad about a 17 P/E though, and it's Exxon for crying out loud. We're looking at inflation down the road, and oil prices are going to benefit. They already are.

    The market hasn't been driven by real fundamentals in a long time.

    Those P/E's alone are not reason enough to expect an overvaluation crash, and I bet Toro would agree.

    You have to look into the future a bit and understand WHY the speculation exists, and if it appears warranted.

    In some of the ones you mentioned, I think it is warranted.

    But the ultimate result will of course be a crash somewhere farther down the road. There always is.

    All you can do is figure out your own timing.
     
  3. Neubarth
    Offline

    Neubarth At the Ballpark July 30th

    Joined:
    Nov 8, 2008
    Messages:
    3,751
    Thanks Received:
    199
    Trophy Points:
    48
    Location:
    South Pacific
    Ratings:
    +199
    As you have done, it is possible to rationalize each and every potential exception. Mind you that the selling will come from people telling their mutual fund to sell, and if the mutual fund has shares of DJIA stocks, they get sold regardless if they are close to reason in price.

    It matters not what the P/E is. What matters is "Are the mutual funds being told to sell?"

    When I was a Pac Bell employee, I told my IRA mutual fund to put me into money market funds on several occasions, like in 2001 and again in 2002. I am certain that I added to the selloffs in those years as did many of my coworkers who listened to what I told them when I felt that the market was in a bubble that needed to burst.

    I see another bubble now, but can not guarantee that it will burst. I expect it will, soon, but when I can not say. Some stocks out there are 5 and 6 times a normal P/E. People are putting their money into Mutual Funds whenever one of the Obama minions lies about the economy. The DOL is totally corrupt with their unemployment numbers, and that led to a good portion of the runup in the market.

    As I have pointed out fifty times on this forum every time the DOL says that Unemployment Insurance claims have gone down, THEY HAVE ACTUALLY GONE UP.

    Whenever the DOL says that people have left the workforce (supposedly 6 million in the past few years), THEY ARE STILL LOOKING FOR WORK. Obama and his minions just do not what them counted.
     
  4. CrusaderFrank
    Offline

    CrusaderFrank Diamond Member

    Joined:
    May 20, 2009
    Messages:
    81,269
    Thanks Received:
    14,921
    Trophy Points:
    2,210
    Ratings:
    +37,077
    It's because of foreign money.

    When Obama and the Dems kill the dollar and our AAA Credit, US Multinationals will be worth relatively more because of their ability to get currencies besides dollars.
     
    • Thank You! Thank You! x 1
  5. Paulie
    Offline

    Paulie Platinum Member

    Joined:
    May 19, 2007
    Messages:
    31,606
    Thanks Received:
    4,856
    Trophy Points:
    1,130
    Ratings:
    +15,500
    Let's not forget about the Hedge Funds shorting, either. You make a good point about the Mutuals though.

    Right now, with all the liquidity sitting in reserve and the Fed saying they're NOT raising rates, there's no reason to sell and plenty of reason to buy. The banks aren't really lending any money out in any significance, so the smart money is playing the inflation potential when that money finally hits the streets. I bet the banks have been creating a lot of this run-up in the markets lately by playing with all those excess reserves they've been refusing to lend out.

    It all comes down to what the Federal Reserve does.

    I'll leave the unemployment thing to you and pinqy, that's you guys' thing :lol:
     
    Last edited: Nov 7, 2009
  6. FactFinder
    Offline

    FactFinder VIP Member

    Joined:
    Mar 1, 2009
    Messages:
    2,641
    Thanks Received:
    202
    Trophy Points:
    83
    Ratings:
    +237
    Is the DJIA way overvalued???

    yes

    and so are commodities, especially gold
     
    Last edited: Nov 7, 2009
  7. Toro
    Offline

    Toro Diamond Member

    Joined:
    Sep 29, 2005
    Messages:
    50,786
    Thanks Received:
    11,059
    Trophy Points:
    2,030
    Location:
    The Big Bend via Riderville
    Ratings:
    +25,121
    I don't think its "way" overvalued but I do think stocks have become expensive, especially given the current economic environment.
     
  8. FactFinder
    Offline

    FactFinder VIP Member

    Joined:
    Mar 1, 2009
    Messages:
    2,641
    Thanks Received:
    202
    Trophy Points:
    83
    Ratings:
    +237
    Without a new bubble emerging they don't know what to do with themselves or OPM.

    So they have attempted to bubblize the market in general. Problem is it is doomed to the same fate as all bubbles.

    If they were smart they would look back at the old timer investors but then they would have to cater honesty and patience as virtues.
     
    Last edited: Nov 7, 2009
  9. Paulie
    Offline

    Paulie Platinum Member

    Joined:
    May 19, 2007
    Messages:
    31,606
    Thanks Received:
    4,856
    Trophy Points:
    1,130
    Ratings:
    +15,500
    Why is gold overvalued?
     
  10. FactFinder
    Offline

    FactFinder VIP Member

    Joined:
    Mar 1, 2009
    Messages:
    2,641
    Thanks Received:
    202
    Trophy Points:
    83
    Ratings:
    +237
    It's based on the assumption of the collapse of the dollar or worldwide economy generally.

    Ain't gonna happen.

    If it did what good would gold do you. You can't eat it.
     
    Last edited: Nov 7, 2009

Share This Page