Quote:
Originally posted by Superman
Then "bubble" also applies to the stock market. Isn't it true that stock selling prices outstrip the present value of it's expected earnings stream? A share of stock has an intrinsic value. It represents a string of expected future earnings. Paying more than that is pure gambling. Pure speculation. And you're betting on something being even more overvalued in the future than it is now.
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Correct. Right now I would say stocks are reasonably valued.
S&P 500 earnings have risen something like 200% over the past 5-6 years, while stock prices have only increased 1% or 2%.
In other words 5-6 years ago stocks were extremely poor value... priced waaay above historical averages and if you bought then it would have been based on the gamble that they would become even more expensive for what they are.