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What Stock Prices Have Gotten Stupid?
Posted By Barry Ritholtz On November 25, 2013 @ 4:12 pm In Psychology | Comments Disabled
I wanted to point you to a quick chart from Ethan Harris and his global research team  at Bank of America Merrill Lynch. It addresses something I have referenced before — the idea that so many folks could be accurately spotting a bubble  in real time with any degree of accuracy.
The argument I made is admittedly squishy, not relying on quantitative data or pricing. Several of you pointed this out, to which I pleaded guilty. So I started looking for more price-driven examples that might make the same case.
Hence, Harris’s chart above. When we look at the prior peaks, and the run that took markets there, it is pretty obvious in hindsight that prices had gotten stupid.
Which leads me to this question: What prices today are utterly stupid? What has run up with no logical explanation?
I see lots of asset classes that have had great runs, but nothing I can point out as insane. Even the 160 percent S&P 500 rally follows a 57 percent drop, and a 140 percent earnings gain from the lows. That’s somewhat above median, but not unprecedented.
Question: What specific prices are revealing of a bubble?
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2013/11/what-stock-prices-have-gotten-stupid/
URLs in this post:
 Image: http://www.ritholtz.com/blog/wp-content/uploads/2013/11/bubbly.png
 global research team: http://www.ml.com/?id=7695_8137
 spotting a bubble: http://www.bloomberg.com/news/2013-11-19/the-bubble-in-bubbles.html
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