Zero Hour by Harry S. Dent Jr. & Andrew Pancholi

Zero Hour by Harry S. Dent Jr. & Andrew Pancholi

Author:Harry S. Dent, Jr. & Andrew Pancholi
Language: eng
Format: epub
Publisher: Penguin Publishing Group
Published: 2017-11-14T05:00:00+00:00


PART II

The Invisible Yet Blatant Bubble

CHAPTER 9

There’s No Bubble Here?!

Stocks are more overvalued today than they were in 2000, at the peak of the dot-com bubble. Anyone who can’t see that is blind!

Harry Dent

THE CHEERLEADERS ARE BOUNCING AROUND, waving pom-poms, and chanting:

No bubble!

No bubble!

No. NO. Bubble!

Janet Yellen’s one of them.

So is Warren Buffett, the Oracle of Omaha, who said earlier this year on Squawk Box, “We are not in bubble territory!”

They should be shouting a different chant . . .

We’re number one . . .

Can’t be number two . . .

And we’re going to beat . . .

The whoopsie out of you!

When this bubble bursts—and we ARE in a bubble . . . and it WILL burst—it’s going to absolutely beat the whoopsie out of those ignoring the obvious.

Economist Robert Shiller developed the best valuation indicator thus far. The Nobel laureate’s cyclically adjusted price-earnings ratio is known as the Shiller P/E, or CAPE.

Shiller’s CAPE shows that we are clearly in bubble territory, yet even he doubts it . . . eventually everyone joins the bubblemania!

He uses the average of the past ten years’ earnings to smooth out wild fluctuations near tops and when earnings suddenly crash in major recessions or depressions. This makes the model more reliable than the simple price-to-earnings ratio (P/E).

Only a blind person couldn’t see that we’re deep in danger territory!

We’ve gone higher only twice before, and there are specific reasons for that, which I’ll explore shortly.

But just look at this chart. . . .



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