Monday, April 1, 2013

Well, my retirement account certainly hopes he's right!

I'm of the opinion that the stock market is overinflated and, if not an actual bubble, definitely moving that direction.  Former Ronald Regan budget director David Stockman has a new book out (I haven't read it) and in it, he apparently takes Fed Chair Bernanke to task for over inflating the economy as his predecessor Alan Greenspan did.  However, one of my favorite -- and OLS most cited -- economists, Mark Perry, is skeptical of a market bubble.  In an interesting post today at his invaluable blog Carpe Diem, Perry addresses this issue and offers this interesting point:
In the current bull market rally, at least so far, corporate profits are consistent with stock market levels; and if that one-to-one trend between profits and stock prices continues, the current bull market is sustainable as long as profits continue to rise.
I sure hope Perry is right!