Interested in hearing some WSO opinions on current stock market valuations versus current underlying economic conditions and as to whether you view the Fed's aggressive intervention as a pro or con or both. Intentionally a broad topic just want to hear some debate on the subject where OP isn't explicitly asking if we are at bottom, etc. This way the conversation can start and go anywhere.
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Current stock valuations are just about flat over the last year
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Current Economic Conditions over the last year
1.) Unemployment 4% to 15%
2.) Fed Int Rates fall 2.5% to 0%
3.) PMI falls from 52 to 37
4.) Stock volatility has tripled
5.) Oil down 70%
6.) Gold up 32%
Fed and other Central Banks replies were massive and this could help to think why markets have seen higher prices now. Situation is stabilizing slowly but it is stabilizing. We all know that markets love stability.
Moreover, also in this situation there are winners and losers, among companies too. So even if some key indicators are worse, think that they do not explain the overall situation that is more complex.
Eventually, if we want to bring some Behavioral Finance here..prices aren't rational 100% because market players rarely are. So that could explain your point about valuations too.
There is not a final and certain explanation!
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