{"id":9840,"date":"2014-05-21T04:00:22","date_gmt":"2014-05-21T08:00:22","guid":{"rendered":"http:\/\/goldstocksforex.com\/?p=9840"},"modified":"2014-05-21T04:00:22","modified_gmt":"2014-05-21T08:00:22","slug":"is-the-market-overpriced-episode-iv","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2014\/05\/21\/is-the-market-overpriced-episode-iv\/","title":{"rendered":"Is the market overpriced? Episode IV"},"content":{"rendered":"<p>In my <a href=\"http:\/\/goldstocksforex.com\/2014\/05\/08\/is-the-market-overpriced-episode-iii\/\" title=\"Is the market overpriced? Episode III\" target=\"_blank\">last post<\/a> I said that, with interest rates, tax rates and real wages at historic lows, corporations are likely to make fat profits over the next few years and stocks remain reasonably buoyant. But at least one of these factors can be expected to change. <\/p>\n<ol>\n<li>Recovery of the housing market would cause the Fed to lift interest rates;<\/li>\n<li>Revision of the tax code by a President who can work with both sides of the House; or<\/li>\n<li>A dramatic fall in exchange rates placing upward pressure on wages as manufacturers regain export markets.<\/li>\n<\/ol>\n<p>What I did not emphasize is that none of the above are likely to occur without a strong economic recovery &mdash; and the net effect of any change could well be a boost to corporate earnings.<\/p>\n<p>What also dawned on me after reading <a href=\"http:\/\/goldstocksforex.com\/2014\/05\/19\/the-inequality-puzzle-lawrence-h-summers\/\" title=\"Larry Summers: The Inequality Puzzle\" target=\"_blank\">The Inequality Puzzle by Larry Summers<\/a> is that there may be a common thread. The impact of new technologies over the last two decades and access to cheap labor through increased globalization may have created a sustainable increase in corporate profits as a percentage of GNP. Could this time really be different? Only time will tell. I will be watching sales growth and profit margins over the next few years with interest.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In my last post I said that, with interest rates, tax rates and real wages at historic lows, corporations are likely to make fat profits over the next few years and stocks remain reasonably buoyant. But at least one of these factors can be expected to change. Recovery of the housing market would cause the &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/thepatientinvestor.com\/index.php\/2014\/05\/21\/is-the-market-overpriced-episode-iv\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Is the market overpriced? Episode IV&#8221;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5,57,34],"tags":[648,830,1576,1826,2458],"class_list":["post-9840","post","type-post","status-publish","format-standard","hentry","category-economy","category-stock-markets","category-us-canada-countries-regions","tag-cheap-labor-markets","tag-corporate-earnings","tag-globalization","tag-inequality","tag-new-technologies"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Is the market overpriced? Episode IV - the patient investor<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is the market overpriced? Episode IV - the patient investor\" \/>\n<meta property=\"og:description\" content=\"In my last post I said that, with interest rates, tax rates and real wages at historic lows, corporations are likely to make fat profits over the next few years and stocks remain reasonably buoyant. But at least one of these factors can be expected to change. Recovery of the housing market would cause the &hellip; Continue reading &quot;Is the market overpriced? 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With massive central bank pump priming -- referred to by Mark Mobius here -- this time may be different. Flows of new money from central bank balance sheet expansion\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":9791,"url":"https:\/\/thepatientinvestor.com\/index.php\/2014\/05\/08\/is-the-market-overpriced-episode-iii\/","url_meta":{"origin":9840,"position":1},"title":"Is the market overpriced? Episode III","author":"ColinTwiggs","date":"May 8, 2014","format":false,"excerpt":"US markets look pricey when we compare market capitalization to GDP. Why is the market ignoring this? The S&P 500 is trading on a reasonable forward Price-Earnings Ratio (PE) of 15.17, but this forecasts a 23% jump in earnings over the next 12 months. Current as reported PE of 18.64\u2026","rel":"","context":"In &quot;Active Investing&quot;","block_context":{"text":"Active Investing","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/investing\/active-investing\/"},"img":{"alt_text":"S&P 500","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-05-08-spx-pe.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-05-08-spx-pe.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-05-08-spx-pe.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":11979,"url":"https:\/\/thepatientinvestor.com\/index.php\/2015\/06\/25\/are-us-stocks-really-over-valued\/","url_meta":{"origin":9840,"position":2},"title":"Are US stocks really over-valued?","author":"ColinTwiggs","date":"June 25, 2015","format":false,"excerpt":"Stock Market Capitalization Let us start with Warren Buffet's favorite market valuation ratio: stock market capitalization to GDP. I have modified this slightly, replacing GDP with GNP, because the former excludes offshore earnings \u2014 a significant factor for multinationals. The ratio of stock market capitalization to GNP now exceeds the\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"US stock market capitalization to GNP","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2015\/2015-06-25-marketcap-gnp.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2015\/2015-06-25-marketcap-gnp.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2015\/2015-06-25-marketcap-gnp.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":13774,"url":"https:\/\/thepatientinvestor.com\/index.php\/2015\/06\/25\/are-us-stocks-really-over-valued-2\/","url_meta":{"origin":9840,"position":3},"title":"Are US stocks really over-valued?","author":"ColinTwiggs","date":"June 25, 2015","format":false,"excerpt":"Let us start with Warren Buffet's favorite market valuation ratio: stock market capitalization to GDP. I have modified this slightly, replacing GDP with GNP, because the former excludes offshore earnings \u2014 a significant factor for multinationals. The ratio of stock market capitalization to GNP now exceeds the highs of 2005\/2006,\u2026","rel":"","context":"In &quot;Market Insights&quot;","block_context":{"text":"Market Insights","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/market-insights\/"},"img":{"alt_text":"US stock market capitalization to GNP","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2015\/2015-06-25-marketcap-gnp.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2015\/2015-06-25-marketcap-gnp.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2015\/2015-06-25-marketcap-gnp.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":13714,"url":"https:\/\/thepatientinvestor.com\/index.php\/2014\/02\/03\/are-us-corporate-profits-sustainable\/","url_meta":{"origin":9840,"position":4},"title":"Are US corporate profits sustainable?","author":"ColinTwiggs","date":"February 3, 2014","format":false,"excerpt":"Fierce debate has been raging as to whether rising US corporate profits are sustainable or likely to shrink, leaving the market overvalued. Consideration of some of the key contributing factors will enable us to assess if and when this is likely to occur. Interest Rates Low interest rates are clearly\u2026","rel":"","context":"In &quot;Market Insights&quot;","block_context":{"text":"Market Insights","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/market-insights\/"},"img":{"alt_text":"Corporate Profits and AAA Bond Yields","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/corpprofits-aaayields.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/corpprofits-aaayields.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/corpprofits-aaayields.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":9137,"url":"https:\/\/thepatientinvestor.com\/index.php\/2014\/02\/05\/taxes-and-corporate-profits\/","url_meta":{"origin":9840,"position":5},"title":"Taxes and corporate profits","author":"ColinTwiggs","date":"February 5, 2014","format":false,"excerpt":"A secondary element \u2014 when compared to wages, raw materials and interest rates \u2014 is the impact of a lower effective tax rate [blue line] on US corporate profits (CP\/GDP). Part of the post-GFC fall in the effective corporate tax rate can be attributed to tax losses, incurred during the\u2026","rel":"","context":"In &quot;Stock Markets&quot;","block_context":{"text":"Stock Markets","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/stock-markets\/"},"img":{"alt_text":"Effective Corporate Tax Rate","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/corptax.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/corptax.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/corptax.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]}],"_links":{"self":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/9840","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/comments?post=9840"}],"version-history":[{"count":0,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/9840\/revisions"}],"wp:attachment":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/media?parent=9840"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/categories?post=9840"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/tags?post=9840"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}