America, the Worlds Priciest Stock Market by Robert Shiller

[TomCADem]

Interesting article by Robert Shiller regarding the current high priced stock market. When have seen this before? In 2001 and 2008.

https://www.barrons.com/articles/america-the-worlds-priciest-stock-market-1517019872

This brings us back to the mystery of what’s driving the U.S. stock market higher than all the others. It isn’t the “Trump effect,” or the effect of the recent cut in the U.S. corporate tax rate. After all, the U.S. has pretty much had the world’s highest CAPE ratio ever since President Barack Obama’s second term began in 2013.

Nor is extrapolation of rapid earnings growth a significant factor, given that the latest real earnings per share for the S&P index are only 6% above their peak about 10 years earlier, before the eruption of the 2008 financial crisis.

Part of the reason for America’s world-beating CAPE ratio may be its higher rate of share repurchases, although buybacks have become a global phenomenon. Higher CAPE ratios in the U.S. may also reflect a stronger psychology of fear about the replacement of jobs by machines. The flip side of that fear, as I argued in the third edition of my book Irrational Exuberance, is a stronger desire to own capital in a free-market country with an association with computers.

The truth is that it is impossible to pin down the full cause of the high price of the U.S. stock market. The lack of any clear justification for its high CAPE ratio should remind all investors of the importance of diversification, and that the overall U.S. stock market shouldn’t be given too much weight in a portfolio.

[Dawson Leery]

1. 27K may be coming in a few weeks.

[Yavin4]

2. How about 0% interest rates for almost 8 years and leaving those same rates at

stimulus levels for the past year or so. I think that's a pretty big reason. The country is awash in money. If we didn't suppress labor wages to ridiculously low levels, we would have run away inflation.

[doc03]

3. There is nowhere else to put money, my bank pays .51% interest ther MM account and even

less on regular savings or checking. MM mutual funds paid less than 1% up until the last few weeks.