Business Insider recently had a story on why the US stock market is the place to be. 6 reasons why the US stock market is still the place to be Let’s take a look. My comments are in red.
- US economic growth, as measured by GDP, has outpaced other G10 economies since the end of the recession and is forecast to keep doing so, as the chart below shows. So what, just because we outpaced everyone, doesn’t mean we can’t have a bear market here.
- US companies have been more likely to meet their forecasts for earnings growth than other developed countries over the past several years. Again, who cares, doesn’t mean we can’t have a bear market.
- US stocks have more exposure to faster-growing sectors like technology and health care. Yep, and the above sectors are in a massive overvaluation/speculation bubble.
- Higher US yields support higher valuations for stocks. You kidding….right?
- Price-to-earnings ratios tend to move in tandem with the dollar, and will climb if the dollar rally continues. Two things here. First, this utter nonsense. There is no long-term evidence to support this statement. And even if it was true, the dollar is about to reverse. As discussed in our weekly podcast.
- Adjusting for sector mix, US stocks are not expensive versus the rest of the world. The US stock market is massively overpriced and on par, if not worse, than 2000 and 2007 tops. I have shown the evidence of that here over the last few months.
In short, the points above is how the majority of money managers and investors out there think today. Unfortunately, their arguments hold very little water. A bear market here would make just as much sense, in not more, as the continuation of today’s bull market.
6 Reasons Why The US Stock Market Is NOT The Place To Be Google