U.S. Stocks on a generalized basis - [S&P 500 Index Fund etc.] - are gratuitously overvalued. So buyer or holder beware!

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Reminder

J. Paul Getty Quotes!

Stock Market - "For as long as I can remember, veteran businessmen and investors - I among them - have been warning about the dangers of irrational stock speculation and hammering away at the theme that stock certificates are deeds of ownership and not betting slips.

The professional investor has no choice but to sit by quietly while the mob has its day, until enthusiasm or panic of the speculators and non-professionals has been spent. He is not impatient, nor is he even in a very great hurry, for he is an investor, not a gambler or a speculator. 

There are no safeguards that can protect the emotional investor from himself."

DYI:  The U.S. Stock Market has left all sense of investing – as opposed to speculating – for far longer than I care to admit.  Currently the market is showing no better valuations than many months ago when interest rates were back at their sub atomically low level.  Sky high valuations exist, a marker for future returns.  What can be expected for average Joe or Jane Doe that the vast majority use a managed generalized stock fund (Growth Fund) or the old stand by the S&P 500 Index Fund??

Markets Expected Future Returns

Going to MoneyChimp.com let’s plug in the numbers.  Shiller PE 10 as of yesterday was 30.67 with a scant 1.54% dividend yield all for the S&P 500 Index.  Pop the numbers into their calculator using returns over the next 10 years and your answer is – drum roll please – a blazing earth scorching estimated average annualized return of 0.48%. 

Of course this is a nominal return not real returns after all expenses factored.  Commissions and trading costs for the fund, and of course, the worst tax of all inflation will reduce your returns and in this case it will be negative.  Attempting to factor the inflation rate at this current juncture is impossible due to the mass insanity our Federal and State spending forcing the Federal Reserve to monetize – hence monetary inflation – those debts.

So…As far as stocks are concerned this is terrible time to hold or purchase stocks on a whole sale basis.  We’ll just have to wait like the old time hard nosed investor while we watch the insanity of the crowd having their speculative binge!

DYI