Is The Us Stock Market Overvalued?

Discussion in 'Stock Market Forum' started by longtermbull, Jul 12, 2018.

  1. longtermbull

    longtermbull Administrator Staff Member

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    While interest rates in the US have increased of late, we are still living in a low interest rate environment where debt is cheap for both individuals and companies. As in when we move slowly back towards more “traditional” interest rate levels, do you expect a correction in the US stock market?
     
  2. Chartman

    Chartman Senior Investor

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    This is a very delicate move for all governments/central banks around the world. If they move interest rates too high too quickly this will kill new funding and massively increase financial expenses on existing variable loans - stunting business growth at best and pushing some to the wall at worst. Leaving rates too low for too long could lead to a boom and bust scenario and store up significant problems for the future.
     
  3. gowiththeflow

    gowiththeflow Senior Investor

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    It is difficult to say whether the US stock market is overvalued until we see how companies and profits react when interest rates do move back towards their more traditional levels. At this moment in time I personally think that US stock markets are focusing on the potential positive is going forward and ignoring concerns are confusion, predominantly centred round trade tariff wars.
     
  4. longtermbull

    longtermbull Administrator Staff Member

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    There is an awful lot to consider when arriving at a “proper” valuation for the US stock market in your head. The bottom line is nobody has been in this situation before, historically low interest rates, and therefore there is limited experience as to what will happen and how this will impact stock markets. One thing we do know, the waters will be choppy in the medium term!
     
  5. voronnorov

    voronnorov Member

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    Yes, the market is overvalued. Companies do not create value equal to the value of money. But this can last a long time.
     
  6. gowiththeflow

    gowiththeflow Senior Investor

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    People keep trying to call the top of the market but after a short dip it seems to come back. However, I read somewhere that as sales growth starts to slow and costs (such as wages) continue to make up the time lag, this can seriously slow short to medium term growth. A slight sense of this happening and some of the stocks on high PE ratios might be in for a shock!
     
  7. David

    David Member

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    Considering 7.8 Billion shares of MSFT out there, means about 2 share for every man and woman on the planet with a few left over, NAW, it isn't over valued, it is INSANE...
    Cisco had a Billion less shares before they tanked some years ago.
     
  8. David

    David Member

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    It is funny you know, the Zimbabwe market went up and up and up, it was the top market of the world for gains, Even when the Country could not afford to buy the ink to print anymore trillion dollar paper currency, it was still going up.
     
  9. David

    David Member

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    “Come all ye conservatives and liberals
    who want to conserve the good things and be free,
    come away from the merchants of big answers,
    whose hands are metalled with power;

    from the union of anywhere and everywhere
    by the purchase of everything from everybody at the lowest price
    and the sale of anything to anybody at the highest price;

    from the union of work and debt, work and despair;
    from the wage-slavery of the helplessly well-employed.

    From the union o f self-gratification and self-annihilation, secede into care for one another and for the good gifts of Heaven and Earth.”
    By Wendell Barry
     
  10. longtermbull

    longtermbull Administrator Staff Member

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    I am not sure what relevance your comments have to the headline post subject matter? Do you think the US market is over valued? If so I would be interested to know why?

    Has Zimbabwe not had mega inflation issues for years?
     

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