Sunday, March 24, 2013

"Record U.S. stocks at lowest valuation since 1980"

S&P 500 is trading at 15.4 times profit

"Even though U.S. stocks more than doubled during the four-year bull market, individual investors' aversion to equities has left companies in the S&P 500 cheaper than at any record high since 1980.

The S&P 500 rose to an all-time closing high of 1,563.23 March 14, up more than 130% from its 2009 lows.

The index trades at 15.4 times reported profit, below the average 19.9 reached in bull markets since 1962, according to data compiled by Bloomberg."

Although individuals have added almost $20 billion to U.S. stock funds so far this year, the amount is just 3.5% of the withdrawals since 2007 and compares with $44 billion placed with fixed-income managers in 2013, according to the Investment Company Institute.

For bulls, the absence of private buyers shows that there is plenty of money to keep the rally going.

Bears contend that the pessimism means the rally is too dependent on Federal Reserve stimulus and will fizzle once central bank support ebbs."

Full article here

I am still buying stocks - ETFs to be exact, as I hope will never ever be lured again to individual stocks - but I am fearful so I am buying bonds as well and I never bought bonds before as I'd thought stocks were a better investment. The Great Recession proved me wrong and the lesson was costly.


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