The Collapse of the U.S. Economy

Stock Market Casino Royale – S&P 500 is Overvalued by 100 Percent

Earnings do not Justify Current S&P 500 Levels. Financial Markets setting up for Another Correction.

February 2, 2010

mybudget360 - When I look at the S&P 500 like most people do, you would expect that this wide cross-section of companies in the U.S. would reflect an accurate measure of the true health of industries in our economy. Yet the S&P 500 is fully disconnected from any historical measures of valuations.

It is startling to see people talk about the wild swings in the stock market as if this were somehow standard in a regular market.

The S&P 500 fell by a stunning 58 percent from the peak in summer of 2007 to the low in March of 2009. But from March of 2009 to February of 2010 the market has rocketed back up by 63 percent.

This kind of massive market volatility is not indicative of a healthy stock market. This is a symptom of a system that is having a really hard time valuing assets since much of the toxic financial assets are still lurking in the murky black box of many financial institutions ...