Money and Finance
- Hussman Weekly Market Comment: Broken Links: Fed Policy And The Growing Gap Between Wall Street And Main Street
Link to: Broken Links: Fed Policy and the Growing Gap Between Wall Street and Main StreetWhen the majority of Americans examine the world around them, they see a stock market at record highs and modest apparent improvement in the economy, but they...
- Gr-neam Reflections: 05/01/2014 - The Coming Education Of Janet Yellen
Link to: The Coming Education of Janet Yellen Janet Yellen's recently expressed sentiments are praiseworthy but do not make for good monetary policy. This is likely to increase the odds of financial volatility. ...
- Folly Of The Fed: Why Janet Yellen May Be A Dangerous Choice - By Andrew Smithers
Found via Jon Shayne's Blog. The pending appointment of Janet Yellen as chair of the Federal Reserve Board of Governors gives me great cause for concern. By all reports, she is highly intelligent and, in the opinion of her peers, highly qualified...
- Hussman Weekly Market Comment: Baby Steps
“The events of the past decade demonstrate the enormous human costs of asset price bubbles and crashes.” – San Francisco Fed President John Williams, September 2013 And yet, here we are again. The Federal Reserve has now enabled the creation of...
- Hussman Weekly Market Comment: Don't Take The Bait
Investors who allow Wall Street to convince them that stocks are generationally cheap at current levels are like trout - biting down on the enticing but illusory bait of operating earnings, unaware of the hook buried inside. I continue to urge investors...
Money and Finance
Janet Yellen and hindsight value – by Andrew Smithers
Link to article: Janet Yellen and hindsight value
“Janet Yellen, the Fed’s head, rather bizarrely used the prospective price/earnings ratio, one of the weakest of all measures, to justify a statement that Wall Street was not overvalued. (This was doubly strange since her husband, George Akerlof, co-wrote a book with Robert Shiller, who has championed a much better measure…” I quote from a recent Buttonwood column in The Economist.
Calling Ms Yellen’s comment “strange” seems very kind. Many people would rate the use of bad data in preference to better as irresponsible rather than strange, particularly when it carries with it the authority of the US Federal Reserve.
In my first blog I pointed out that, according to both the cyclically adjusted price/earnings ratio and q, the US stock market was overvalued more than 70 per cent and that these were the only valid measures of value that I had been able to find. I also remarked that using prospective PEs was, together with many other measures, demonstrably invalid.
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Related previous post: Andrew Smithers on the McAlvany podcast
Related books:
The Road to Recovery: How and Why Economic Policy Must Change
Valuing Wall Street: Protecting Wealth in Turbulent Markets
- Hussman Weekly Market Comment: Broken Links: Fed Policy And The Growing Gap Between Wall Street And Main Street
Link to: Broken Links: Fed Policy and the Growing Gap Between Wall Street and Main StreetWhen the majority of Americans examine the world around them, they see a stock market at record highs and modest apparent improvement in the economy, but they...
- Gr-neam Reflections: 05/01/2014 - The Coming Education Of Janet Yellen
Link to: The Coming Education of Janet Yellen Janet Yellen's recently expressed sentiments are praiseworthy but do not make for good monetary policy. This is likely to increase the odds of financial volatility. ...
- Folly Of The Fed: Why Janet Yellen May Be A Dangerous Choice - By Andrew Smithers
Found via Jon Shayne's Blog. The pending appointment of Janet Yellen as chair of the Federal Reserve Board of Governors gives me great cause for concern. By all reports, she is highly intelligent and, in the opinion of her peers, highly qualified...
- Hussman Weekly Market Comment: Baby Steps
“The events of the past decade demonstrate the enormous human costs of asset price bubbles and crashes.” – San Francisco Fed President John Williams, September 2013 And yet, here we are again. The Federal Reserve has now enabled the creation of...
- Hussman Weekly Market Comment: Don't Take The Bait
Investors who allow Wall Street to convince them that stocks are generationally cheap at current levels are like trout - biting down on the enticing but illusory bait of operating earnings, unaware of the hook buried inside. I continue to urge investors...