Stock valuations pointer to the extreme end of this collapse the past 3

Idea Donald Trump economic optimism in the market expectations, boosted stocks Starsky and Hutch, S&P 500 index written record.

But some Wall Street strategists are worried that they will observe a valued pointer, discovery has come to rare extremes during the past 100 years, the past 3 times this, end of the market, without exception, is to collapse.

According to the CNBC report, a famous analysts Alan Newman pointed out in the investment in late November, created by the Economist Robert Shiller valuation pointer, known as The cyclically adjusted P/E (CAPE), now has more than 27, only the 1929 stock market mania, the 2000 tech bubble and the 2007 housing market bubble, to reach this level.

Newman said that, even if the market can trump policy increased 10%, current valuations to extreme value of the condition is still very serious. Created by Shiller CAPE, its way to calculate PE ratios, in part of the profit, is calculated based on 10-year average, and adjusted according to inflation. According to his study, relative basis, 10 stock market returns in the future, and CAPE negatively correlated.

His research results on the inefficiencies and valuations in the stock market, 2013 WINS Nobel Prize for him. From this data, US stocks in 5-6 times, the CAPE is a powerful base, more than 25 times, came to the irrational boom at the end of November, the data is 27.7.

Past up to the 2000 tech bubble, CAPE of 44.2 times times. Even if only the general use of PE ratios, market valuation is still quite high. According to FactSet data, down 500 at 18.9 times times the past 12 months, the highest in 12 years.