Bubble warning

[kentuck]

http://www.economist.com/opinion/displayStory.cfm?story_id=15213157&source=hptextfeature


Markets are too dependent on unsustainable government stimulus. Something’s got to give.

THE effect of free money is remarkable. A year ago investors were panicking and there was talk of another Depression. Now the MSCI world index of global share prices is more than 70% higher than its low in March 2009. That’s largely thanks to interest rates of 1% or less in America, Japan, Britain and the euro zone, which have persuaded investors to take their money out of cash and to buy risky assets.

For all the panic last year, asset values never quite reached the lows that marked other bear-market bottoms, and now the rally has made several markets look pricey again. In the American housing market, where the crisis started, homes are priced at around fair value on the basis of rental yields, but they are overvalued by almost 30% in Britain and by 50% in Australia, Hong Kong and Spain.

Stockmarkets are still shy of their record peaks in most countries. The American market is around 25% below the level it reached in 2007. But it is still nearly 50% overvalued on the best long-term measure, which adjusts profits to allow for the economic cycle, and is on a par with two of the four great valuation peaks in the 20th century, in 1901 and 1966.

..........more

[Double T]

1. wall street and their enablers are setting up the sucker investors for their next...........

bursting bubble. The cnbc cheerleaders and their 'guests' keep prodding the sideline sitting cash cows to reinvest in the current 'boom' market. When the stimulus and bailouts goeth, the double dip KABOOM cometh, don't get caught with your cash down....on a highly overrated stock.

[girl gone mad]

2. Tell me if this chart looks healthy..

this is the Mexican stock market:

[MidwestTransplant]

3. It doesn't look too unhealthy unless it double tops. Just volitile IMO.

[girl gone mad]

4. If you want to invest, go for it.

I should warn you, though.. Mexico isn't exactly an emerging market.

I'd take the short on this one, then short one of the ultrashort etf's after the bubble bursts (again). Call me naive, but I just don't see peso hyperinflation in our future.