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Originally Posted by Vegas69
The huge stock gains in the last 3-4 years reminds me of the housing market 10 years ago. A huge upswing in a short period that resulted in a big mess. What fundamentals do you guys see in the stock market that dictate these huge gains being anywhere near sustainable? Serious question as I have not a clue. I know interest rates and a stronger economy have freed up discretionary income but to the tune of a 200% rise in stock price? Are we experiencing some new circumstances in the stock market that go against the historical grain?
Greg, I say that all the time, there is never anything wrong with taking a profit. I can say with absolute certainty that there have been times in the last 15 years where I would go back and park money in a safe place after taking a profit.
I'd like to hear some other perspectives on the market.
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If you click a chart of the SPY --- 10 years out.... this is a ETF that is the S&P 500 stocks.
What you'll see is a peak in '07 and a price of about $149 a share.... then a big decline... then the rise to current value. Current value is $212. That's a 56% rise ==== not 200%
You can't use the bottom to calc a gain like this - because you first need to get back to it's old high.
The market is "high" because there's little opportunity elsewhere to put money. But I don't see any bubble - except in certain stocks. Go back to the P/E of your stocks and see where they are individually. That's a price to earnings multiple. I would call the market "normal" if the average P/E was about 17 ish. The current P/E is at 20 so slightly high. But you have to look at this as a WORLD market.... and money flows to safety and return. Right now - the USA looks pretty damn good compared to the rest of the world.