S&P 500 P/E Ratio – The hidden truth
Standard & Poor's New Policy: Concealing the S&P 500 P/E Ratio from the General Public
Some high-level decision-maker at Standard & Poor's has decided that the public should no longer be allowed easy access to this crucial number: the Price/Earnings ratio of the S&P 500.
That number went above 140 on September 30, 2009 -- the highest ever recorded. It had continued upward all year.
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My guess is that the company came under pressure from the brokerage industry to stop publishing what has to be a frightening statistic for brokers, a statistic that says "Sell!"
In other words, if you use 16 as the normal P/E ratio for the S&P 500 then stocks are about 8.75 times over valued for their earnings.
To put things in context of what exactly this means I'll use the tech bubble in 1999/2000. People bought into the mania that drove stock prices to excessive levels but then it happened... The Crash. P/E ratios pushed towards their historical norm and the NASDAQ fell from 5,048.62 to below 2300.
If you apply the same logic here, we're looking at the S&P index dropping to less than 600. If you account for inflation, it would be 400 in year 2000 dollars by the official CPI index and 300 if you go by the shadowstats.com inflation index.
Will investors realize their stocks are way over-valued? All the while, the media is keeping this very quiet because they don't want to wake the sleeping giant. I'll tell you this: I don't want to be in stocks right now.
Gold to Rise to $2,000 Amid ‘Massive’ Inflation, Superfund Says
Gold to Rise to $2,000 Amid ‘Massive’ Inflation, Superfund Says
Gold may rise to a record $2,000 an ounce in the next three years as investors hedge against “massive” inflation sparked by governments printing money, according to Superfund Financial Singapore Pte’s Aaron Smith.
“In the next few years, after the deflation cycle, we’ll see massive inflation,” Managing Director Smith, 30, said in an interview. “Soon, when you go to buy a cup of coffee, you’ll pay $20 or $30 because the dollar won’t be worth anything.”
It continues to say that silver is a good investment. Over the next 3-5 years the gold to silver ratio will go down.
So does anyone see the problem with Aaron Smith's math? If we assume that a cup of coffee today costs $2 then inflation would decrease the value of the dollar by 9/10th to 14/15th using the $20-$30 cup of future coffee. This theoretical dollar of the future is about 6.7-10 cents today. If the "value" of gold is constant, the price wouldn't be $2000 per ounce. It would be $10,000 to $15,000 per ounce. A $100,000 house today will be a cool million to $1.5 million in this case.
This is considering a very expensive cup of coffee too. So, you could very well boost those numbers by 50-200% depending on where you get your coffee.
Again, this is main stream Bloomberg reporting not Fox News. The question is, does Wall Street like inflation? Main Street sure doesn't.
TAX REVOLTS : And so it Begins… Gerald Celente Predictions coming true
People do get it. American Rebirth?
2009 Economic collapse: Protests & RIOTS (Latvia, Bulgaria and Lithuania)
When will the government do the right thing for the people? Will we get to this point?
I have some easy prescriptions:
End corporate personhood through Constitutional Amendment
End the federal reserve and the fractional reserve system
Use the gold or silver standard
Institute Instant Runoff Voting in all elections
Reinstate the Glass-Steagall Act
Start enforcing the splitting up of monopolies and oligopolies. If deemed necessary then monopolies and oligopolies need to be regulated.
Stop all bailouts. That's not how a capitalistic society works. If a company goes bankrupt, they basically cease to exist. "Survival of the fittest" in that realm.
This may not be the exhaustive list but it will cut the corporations out of government, stop the banks and Federal Reserve from stealing $1 trillion dollars per year from us through inflation, give money value, usher in better democracy among the people, reduce the power of the banks and big corporations, and restore true competitive capitalism.
The side benefits are the best part. Stable currency, government that can afford healthcare and medicare a, b, & d, we'd be able to save for retirement and not have to fight inflation, markets would be able to operate competitively again thus creating real, lasting, jobs, and last but not least, we'd have democracy back in the US for and by the people.
If our leaders really believed in democracy for the people they'd do this. Otherwise, we'll have to make this democracy by the people at the next election, if we get there. Any way you cut it, this will not be an easy transition. No matter what road you go down it is hard. Action, inaction, subtle, or abrupt it'll be difficult. I think there is a distinct possibility that Obama will be impeached.
So many ways to break down. So many ways to succeed. We need to try, God damn it. Try, God, damn it. This is our country. I don't want to become a failed nation that takes down all the other nations with it. I want things to be better for us, where the people control their destiny. Not corporations.
How it starts
It starts with some things going wrong. Then others. Each time could be a little more severe than the last. When does Wall Street fail? When do states fail? When do our leaders not do the right thing for us? When does the United States of America fail?
The further we stray from our Constitution, the weaker we become.