The Traderszone Network

Published in TZ Latest News 19 July, 2014 by The TZ Newswire Staff

Stocks Are Severely Overvalued By Almost Every Predictive Metric

The stock market is overvalued by almost every known metric.

 

The single best predictor of stock market performance is the cyclically adjusted price-to-earnings ratio or CAPE ratio. Most investors price a company based on its current Price to Earnings or P/E ratio. Essentially what you’re doing is comparing the price of the company today to its ability to produce earnings (cash).

 

However, corporate earnings are heavily influenced by the business cycle.

 

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