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Investors enter 2017 in front of a stock market ‘steam roller’ – Yahoo!

January 03
16:21 2017

The stock market looks very expensive.

Stock prices have been rallying as earnings growth has been stagnating, which has inflated the forward price/earnings (P/E) multiple on the S&P 500 (^GSPC) to levels we haven’t seen in years.

“[A]t this stage, chasing the rally is akin to picking up nickels in front of a steam roller,” Gluskin Sheff’s David Rosenberg wrote on Wednesday. “[T]he forward multiple is back challenging the cycle highs and already tops the 2007 peak which is worrisome to me, but obviously not the masses.”

It’s totally fair to say stocks are looking very expensive. And to some extent, it’s arguably fair to suggest that P/Es have historically reverted to their long-term averages (although not everyone would say that), which is a risk to prices.

Continue Reading At Yahoo!

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