October 11 The current Shiller PE Ratio is approximately 60% higher than it has been on average. It is as overpriced as the stock market has been on the average panic and stock market collapse that Shiller has tracked. It is almost as bad as 1929 but not nearly as bad as the Dot Com bubble height during Clinton’s presidency that began its collapse in March of the beginning of President Clinton’s last year in office. Of course the leftists blame Bush for that bubble collapse and the 9-11 attack on the Twin Towers, both of with which President Bush had nothing to do with. The important take away point is that the bankrupt situation Obama has created in just two terms is now as bad as the bankrupt situation Obama and other leftist created with the Liar-Loan default bubble that burst in 2008 but not quite as bad as President Clinton’s Dotcom bubble. Of course the liars blame President Bush for everything.

http://www.multpl.com/shiller-pe/

As we slid into the Obama-Dodd-Frank “Liar Loan Derivatives” collapse in 2008 American stocks were priced similar to today.  The trigger mechanism for that collapse was created by well meaning leftists who thought it was the Federal government’s responsibility not just to have a roof over every American’s head but to provide every American with their own home.  The leftists had determined that it was possible because stingy working people were discriminating against wonderful creative people who produced so much of the music, art and city graffiti that Americans enjoy for free.  Liar Loans were the answer to providing a house to every American family.  Realtors and Banks were sued for racially discriminating against poor people because it was found that certain minorities were not getting the homes that they think is every America’s right.  There was circumstantial proof because some who were eligible who refused to show proof were denied and the Banks and Realtors were accused of not doing due diligence and discovering the fact that they had not disclosed their eligibility.  It suddenly became a racist crime to not discover applicant eligibility whereas in the past it had been the responsibility of the applicant to prove they were financially able.  Fannie and Freddie were created as government agencies to provide the cash “no questions asked” to absolve banks and realtors of financial consequences of being less “discriminatory.”  So banks and realtors began taking the word of applicants who could potentially sue them as the leftists allowed.  Then a few banks bundled and turned the risky mortgages into derivatives which vastly increase the bank leverage and for a while created profits that offset the losses when the mortgages of many went into default.  Ultimately that was the trigger mechanism for colapse in 2008.

The trigger mechanism in 2000 was the DOTCOM bubble where stock price valuations went from income based, to future projected return on investment, to finally being based on fantasized revenue growth.  The situation is much worse today.  Today they are talking about free subscription growth in anticipation that at some time in the distant future they will turn Twitter, Alibaba, and other services into real paying revenue streams just like Google, Facebook and others have done with getting paying advertisers who clutter up the services.  That was the DOTCOM bubble hope in 2000 too. 

 

History has repeated itself and big investors are hoping Apple’s stock price will double again that way.  And so according to the current Shiller PE Ratio, the current stock market is inflated approximately 60% higher than the average level… like at the beginning of past bear markets.  Since the stock market valuation based on subscriptions and revenue hope is not reality based, today’s stock valuations are again 60% or more overpriced and we can expect a stock market collapse of that magnitude. 

In the mean time our market cash flow index had a head and shoulders event in September and then a neckline breakdown and finally a trend line breakdown this past week.  The NYSE had a recent trend line breakdown.

http://finance.yahoo.com/q/bc?s=%5ENYA&t=2y&l=on&z=l&q=l&c=

 

The S&P and other major indices seem close behind.

http://finance.yahoo.com/q/bc?t=2y&s=%5ENYA&l=on&z=l&q=l&c=&ql=1&c=%5EGSPC&c=%5EIXIC

  

Note; this is a blog, not a financial service nor a crystal ball.  The primary interest of this Blog is the defense of the American free enterprise stem that by its very name says our unique American system requires human freedom.  A second goal is to expose the leftists who would bring back feudalism and genocide as we see in Islamic (ISIS), Nationalist Socialist (NAZI), and Internationalist Socialist (Communist) systems.  For instance Putin is no different from the Russian Czars who imprisoned opponents and who lived in palaces and made their enemies disappear. 

Leftist like Obama also live like Czars and take dozens of vacations while the world is torn apart and the poor get poorer.  They don’t have to own anything because they get everything at the taxpayer’s expense and act like they have nothing of their own.  Recently Mrs. Clinton indicated she and President Clinton left office with very little.  That is every leftists dream because incompetence does not matter; only political power is needed to live like a Czar.  And Obama loves that term Czar and even made himself the king of his Czars by appointing 50 Czars to serve him.  And the IRS and other agencies have been used illegally and brazenly to harass Americans and political opponents.