Is the DJIA way overvalued???

[Neubarth]

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

 

[Paulie]

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.

 

[Neubarth]

You are right about some of those.

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.

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.

 

[CrusaderFrank]

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.

 

[Paulie]

You are right about some of those.

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.

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.

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

 

[FactFinder]

Is the DJIA way overvalued???

yes

and so are commodities, especially gold

 

[Toro]

I don't think its "way" overvalued but I do think stocks have become expensive, especially given the current economic environment.

 

[FactFinder]

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.

 

[Paulie]

Is the DJIA way overvalued???

yes

and so are commodities, especially gold

Why is gold overvalued?

 

[FactFinder]

Is the DJIA way overvalued???

yes

and so are commodities, especially gold

Why is gold overvalued?

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.

 

[Paulie]

Is the DJIA way overvalued???

yes

and so are commodities, especially gold

Why is gold overvalued?

It's based on the assumption of the collapse of the dollar or worldwide economy generally.

Not it's not. It's based on the unprecedented money creation by the Federal Reserve in the past 12 months and the potential for huge inflation down the road because of it. And the fact that the Fed has never gotten the exit strategy right in HISTORY, and they've never even faced a task as daunting as this one.

That huge spike there is how much money the Fed has created during this recession, minus demand deposits that also account for the monetary base.

Considering interest rate returns, I highly doubt that very much of that spike has been cash being put into a typical demand deposit account.

The fed created about 1 trillion dollars in one year, and you think there's no reason for the price of gold to hit this level?

 

[FactFinder]

Why is gold overvalued?

It's based on the assumption of the collapse of the dollar or worldwide economy generally.

Not it's not. It's based on the unprecedented money creation by the Federal Reserve in the past 12 months and the potential for huge inflation down the road because of it. And the fact that the Fed has never gotten the exit strategy right in HISTORY, and they've never even faced a task as daunting as this one.

That huge spike there is how much money the Fed has created during this recession, minus demand deposits that also account for the monetary base.

Considering interest rate returns, I highly doubt that very much of that spike has been cash being put into a typical demand deposit account.

The fed created about 1 trillion dollars in one year, and you think there's no reason for the price of gold to hit this level?

I understand all that but going into gold when it is at its all time high violates long held working principles. Gold ain't gonna do it. The only thing that will work is getting the markets honest again and they are struggling big time with that one. Pain avoidance is just staying in denial and ignoring the underlying symptoms till it is impossible not to treat the disease. Trouble with that is the disease may have progressed too far. Gold ain't gonna ease the pain. It will be useless in a collapsed economy. You'd have better value hunting muskrats in the woods.

 

[Paulie]

It's not about a collapsed economy though.

It's about liquidity creation. It's unprecedented. The safest store of wealth is in gold during a time like this. There may be a correction yet, but gold has nowhere to go but up.

It's not ALWAYS wrong to invest in something at it's all-time high. Gold has never seen the potential for increased value like it is seeing right now, so it actually makes PERFECT sense to invest at its high, if you can afford to.

Investors are betting that the Fed doesn't have an adequate exit strategy for all that money creation. At least, that's what it looks like to me.

Search for posts from a poster named "Gonegolfin" in this subforum. He wrote up a piece on the possibilities for the Fed's exit strategy. They've never had this many facilities to have to exit from, let alone do it timely enough to avoid massive price inflation down the road.

They just recently left the rate unchanged. That was a bad move, and so gold went higher with good cause.

 

[FactFinder]

It's not about a collapsed economy though.

It's about liquidity creation. It's unprecedented. The safest store of wealth is in gold during a time like this. There may be a correction yet, but gold has nowhere to go but up.

It's not ALWAYS wrong to invest in something at it's all-time high. Gold has never seen the potential for increased value like it is seeing right now, so it actually makes PERFECT sense to invest at its high, if you can afford to.

Investors are betting that the Fed doesn't have an adequate exit strategy for all that money creation. At least, that's what it looks like to me.

Search for posts from a poster named "Gonegolfin" in this subforum. He wrote up a piece on the possibilities for the Fed's exit strategy. They've never had this many facilities to have to exit from, let alone do it timely enough to avoid massive price inflation down the road.

They just recently left the rate unchanged. That was a bad move, and so gold went higher with good cause.

Believe the hype if you must. Reminds me of all the talk around housing a few years ago. How did that work out? Or maybe you had some stock in internet companies in the late 90's early 2000. A clear sign of something to stay the hell away from is when it is high and there is a lot of hype around it.
1100 bucks an ounce for something that is generally useless escapes my logic.
The market will work again when people become honest and patient, investing in industry that gives true value to their customers. That precludes getting rich quick schemes.

 

[Paulie]

It's not about a collapsed economy though.

It's about liquidity creation. It's unprecedented. The safest store of wealth is in gold during a time like this. There may be a correction yet, but gold has nowhere to go but up.

It's not ALWAYS wrong to invest in something at it's all-time high. Gold has never seen the potential for increased value like it is seeing right now, so it actually makes PERFECT sense to invest at its high, if you can afford to.

Investors are betting that the Fed doesn't have an adequate exit strategy for all that money creation. At least, that's what it looks like to me.

Search for posts from a poster named "Gonegolfin" in this subforum. He wrote up a piece on the possibilities for the Fed's exit strategy. They've never had this many facilities to have to exit from, let alone do it timely enough to avoid massive price inflation down the road.

They just recently left the rate unchanged. That was a bad move, and so gold went higher with good cause.

Believe the hype if you must. Reminds me of all the talk around housing a few years ago. How did that work out? Or maybe you had some stock in internet companies in the late 90's early 2000. A clear sign of something to stay the hell away from is when it is high and there is a lot of hype around it.
1100 bucks an ounce for something that is generally useless escapes my logic.
The market will work again when people become honest and patient, investing in industry that gives true value to their customers. That precludes getting rich quick schemes.

You don't seem to understand gold and inflation. Stocks and housing aren't safe stores of value. They're subject to a plethora of different economic conditions. Gold is mainly subject to the money supply, and right now the future of the money supply shows every reason to be in gold.

Will it become a bubble? Probably. But I don't think it's anywhere near its new high yet.

When we see the Fed take some kind of anti-inflationary action, I'll change my tone on gold.

 

[Paulie]

I realize gold is useless for just about everything, but it's been a store of value for thousands of years, and there's no escaping that fact and also nothing that appears is going to change it, either.

It's not about hype. I pretty much feel the same way about gold as I do about all commodities right now. I'd just as soon buy a commodity ETF as I would gold.

In fact, given its price and the fact that it hasn't kept up with gold the way it did in '08, I think I like silver even better than gold.

 

[FactFinder]

It's not about a collapsed economy though.

It's about liquidity creation. It's unprecedented. The safest store of wealth is in gold during a time like this. There may be a correction yet, but gold has nowhere to go but up.

It's not ALWAYS wrong to invest in something at it's all-time high. Gold has never seen the potential for increased value like it is seeing right now, so it actually makes PERFECT sense to invest at its high, if you can afford to.

Investors are betting that the Fed doesn't have an adequate exit strategy for all that money creation. At least, that's what it looks like to me.

Search for posts from a poster named "Gonegolfin" in this subforum. He wrote up a piece on the possibilities for the Fed's exit strategy. They've never had this many facilities to have to exit from, let alone do it timely enough to avoid massive price inflation down the road.

They just recently left the rate unchanged. That was a bad move, and so gold went higher with good cause.

Believe the hype if you must. Reminds me of all the talk around housing a few years ago. How did that work out? Or maybe you had some stock in internet companies in the late 90's early 2000. A clear sign of something to stay the hell away from is when it is high and there is a lot of hype around it.
1100 bucks an ounce for something that is generally useless escapes my logic.
The market will work again when people become honest and patient, investing in industry that gives true value to their customers. That precludes getting rich quick schemes.

You don't seem to understand gold and inflation. Stocks and housing aren't safe stores of value. They're subject to a plethora of different economic conditions. Gold is mainly subject to the money supply, and right now the future of the money supply shows every reason to be in gold.

Will it become a bubble? Probably. But I don't think it's anywhere near its new high yet.

When we see the Fed take some kind of anti-inflationary action, I'll change my tone on gold.

OK but I hope for your sake you are actually taking possession of it and it is not just a piece of paper or worse a group of electrons on some website.

 

[The Rabbi]

Gold is way over-valued. One measure is the number of ads in mass media touting gold as the cure all. I remember similar ads for real estate about 3 years ago and stocks about 5 years ago.
As to the Dow, it depends. A lot of the improvement in earnings have come not from top line growth but from cost efficiencies and tougher management. If revenues improve those efficiencies will drive profitability to the moon. So perhaps these PEs undervalue the stocks.
OTOH, if the economy continues like this companies will not be able to wrench out further efficiency and earnings will stagnate. So the PEs are too high.
Another factor is the lack of other avenues for investment. PEs run opposite to interest rates. If rates go up then PEs will go down.
Too early to tell.

 

[Paulie]

Believe the hype if you must. Reminds me of all the talk around housing a few years ago. How did that work out? Or maybe you had some stock in internet companies in the late 90's early 2000. A clear sign of something to stay the hell away from is when it is high and there is a lot of hype around it.
1100 bucks an ounce for something that is generally useless escapes my logic.
The market will work again when people become honest and patient, investing in industry that gives true value to their customers. That precludes getting rich quick schemes.

You don't seem to understand gold and inflation. Stocks and housing aren't safe stores of value. They're subject to a plethora of different economic conditions. Gold is mainly subject to the money supply, and right now the future of the money supply shows every reason to be in gold.

Will it become a bubble? Probably. But I don't think it's anywhere near its new high yet.

When we see the Fed take some kind of anti-inflationary action, I'll change my tone on gold.

OK but I hope for your sake you are actually taking possession of it and it is not just a piece of paper or worse a group of electrons on some website.

I don't buy metals if I can't hold them in my hands. I'll trade in and out of an ETF but I wouldn't use the ETF as my long-term cash safety, that's just dumb.

You get more than spot price for the physical metal anyway, in the event that you sell.

I do like Jim Rogers' commodity ETF though, ticker RJI.

 

[garyd]

Pretty simple really the feds are paying wall street to gamble just as they are others to buy houses and cars. People tend to get a little crazy when they've got free money to play with. And the biggest gamblers are the same people that got taken to the cleaners last time around mufunds and insurance companies the latter of whom have no choice but to continue to gamble with policy holders money and hope like hell they can recover some of their losses before Obama kills one of their more lucrative products - health insurance.