Take This Stimulus and Shove It
Smart Money has a good post on the effectiveness of the new stimulus package. The basic tenant of the article is pretty good. America was due for an overall market correction, both stocks and housing.
Let’s review the patient’s symptoms. American share prices have spent the past 135 years at an average of 15 times company profits, but for the past 20 years have fetched an average of 22 times profits. Since October prices have fallen 14%. Tuesday they fell back to average: 15 times profits. House prices have fallen, too, by 6.7% during the year ended October. That’s the largest decline in 20 years, but nowhere near large enough to bring houses back to their historic ratio of prices to rents, or prices to incomes.
The article is a very good read and I tend to agree with many points. What do you think?
Filed under: Finance and Investing
