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As the S&P500 rose to another record close on Friday, find below a sober assessment of the latest round in the S&P500 stock bubble from the FT:
It’s a self-evident over-valuation. But it has been thus for nearly 20 years now. My favourite chart illustrating the madness is the simple points average:
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No prizes for guessing what historians of the future are going to say about that.
The trick is not to ignore it but to time it properly, especially for Australians with a natural currency hedge. I continue to think it will rise further before busting and my two main culprits for ending the cycle remain a slowing China and the shares themselves once a more extreme overvaluation is reached.
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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