Tuesday, August 11, 2009

Is The Fed Blowing Another Bubble In Stocks?

I'm posting an article from www.cnn.com that originates from Fortune magazine. Here's a quote from the article:

"This is the most speculative momentum-driven equity market since the early 1930s," Gluskin Sheff economist David Rosenberg wrote in a note to clients Monday.

Bernanke's Bubble

I'll let everyone read this article and decide for the themselves. Please keep in mind that the trailing "as reported" (i.e. somewhat traditional GAAP method) price/earnings ratio on the S&P 500 Index is significantly higher that the p/e ratio on the tech-heavy heavy Nasdaq at the peak of the tech bubble in early 2000. Also, contrary to Bernanke's claims, the Fed has no way of removing most of the liquidity injected into the sytem from buying toxic assets and distressed mortgages.

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