Investors in the U.S. stock market seemed to have a classic case of what we define as “bubble-phobia,” loosely defined as “fear that this bull market will collapse in a similar fashion to ones in the not so distant past.”
These symptoms can afflict both the experienced professional as well as individual investors and include a failure to commit an appropriate percentage of assets to stocks based upon a fear that the current bull environment is unsustainable.
This “bubble-phobia” can further manifest itself in a lack of action by the investor thereby keeping said investor out of the stock market and reducing one to being reactive rather than proactive.
Our prescription for the above referenced malady is simple – set up disciplines and follow those disciplines.
One way or another, decisions are made.
Either you make them, or through procrastination, they are made for you.
To help ease your case of “bubble-phobia,” we point to several reasons why the stock market is not in a bubble.
First and foremost, investors can feel comfortable that relative stock valuations are reasonable.
With the S&P 500 trading at just over 2,440 along with projected 2017 earnings of approximately $135, the Price-to-Earnings (P/E) Ratio, a common tool used for valuation, stands at 18.0, somewhat in line with the normal historical range.
Corporate profits benefit from a stable interest rate environment, one which makes for a healthy business climate.
With interest rates at or near multi-decade lows and with a Federal Reserve reluctant to upset the apple cart by…
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