Wall street has high hopes for this year but are they fooling us?
Published 5 years ago by BlackDigits
1. When the general consensus is that stocks should rally then that's when you need to be very careful!
2. Total real return over the last 10 years was 2% - so we should expect similar returns for the next decade (is it sufficient? Not to me!)
3. The Graham & Dodd price/earnings (P/E) ratio is 24. That is expensive!
4. Company profits as a % of GDP are well above long term average and the 2013 ratio is much higher than the 10 year average. If corporate profitability falls to the long term average, share prices will have to go down.
Read more about this on http://www.pieria.co.uk/articles/profits_warning_-_us_equities_arguably_offer_even_less_value_than_they_appear_to