The Stock Market Today Compared To History Explained

By Indra Yus

Several wall street advisors data-mine history to Know facts and figures”prove” their cases of today ,to entice you to buy their product. This is can be a tricky business if you looking to the past.

Before you make your next money decision maybe the following are issues that you may want to be aware.human conditions don’t change as long as I’am strong believer that the past will always repeat it self.

I Think They’ve been for the past 400 years as pretty much the same with humans today. The Two Biggest motivators or de-motivators are stil greed and fear. This article simply what has happened , isn’t about what will happen. I am Simply pointing out what should happen or what has a strong possibility of happening and I’m not in the business of prognosticating.

Let’s see what we can discover about Today’s Market and take a walk down history.

The “not so good” facts:

In The Below the Fact is not Good :

Fact 1 : In 1982 ( The Begin of the last bull market), the S&P 500 index sold for eight times earnings or a P/E ratio of 8.Before that Secular bull markets start when P/E ratios are in single digits ( P?E ratio means price to earnings, or the price at which the public is willing to pay for a dollar of the company’s profit).Today the S&P 500 P/E ratio is some place north of 30

The market is not cheap today , so unless we are in dissimiliar times ( and we are never in different times ) , this is not the start of a new secular bull market. By the way , “a market making new all-time highs over a long term period(decades) means “Secular”; so for the S&P 500 , that would mean breaking the 1550 level.When I write this article , The S&P 500 sits around 1030. Amusingly enough,markets historically peak P&E ratios get to levels where they are today.

Fact 2 : We know how it ended the first time. The S&P 500 P/E ratio is already at pre-bubble days. The S&P 500 was north of 30 back in 1999, and we are there once again.

Fact 3 :The Total US Stock market capitalization has been about 50 % of the US GDP in historically.The number you’d get if you took all the outstanding shares of stock in the US and multiplied them by what they are selling for today is Stock Market Capitalization.Gross Domestic product and is the measurement of our economy means GDP. Once more , in History the total Stock market capitalization has been half of the GDP.

Fact 4 : at all time highs is insider selling. Anyone in a company who is a director or above is insiders. She or he is required to file a report with the SEC , when an insider buys or sells his or her. Insider buying and selling is legal.

It’s vey fun when I watching insiders is that they have better visibility than we do. So , we may just want to take notice , if they are buying or selling their own stock. There are 64 shares being sold in this market for every one share purchased from an insider, that’s a 64 to 1 ratio. We have not seen this level of insider selling ever because this kind of selling is at an all time high.

Fact 5 : There are 300 have under-funded pension plans, from 500 companies on the S&P 500.This represents about $250 Billion on in under-funded accounts. That means Companies must redirect part of their earnings back into their pension plans to make up for the shortfall. You are not do it every time but it does meant that fewer advantages are going to you and me.

In The Below The fact is Good

Fact 6 : Indicates the way Stocks are moving which the price-action of stocks. The Direction is down but the end of this three year correction,or near, it looks like we can be at.

At the present , I understand what you’re thinking. What for I said in facts one through five because this seems counter-intuitive.But it really isn’t. Now is not the time to stick your neck out . Buying and holding is not important a good idea right now. Buying and selling later with profits is a good idea. The reason this is not a buy and hold market is that the long –term market is still in a downward trend,while the short-term market is up.

Maybe you interested my articles on Online Stock Trading and Dow industrial Average

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