One of the primary weapons that rational bubblers use to back up their case is the Cyclically Adjusted Price Earnings (CAPE), a measure developed and popularized by Robert Shiller, Nobel prize winner whose soothsaying credentials were amplified by his calls on the dot com and housing bubbles. The first is that they give me extended stretches of time when I can work without interruption, no knocks on the door or email or phone calls. The courts have tended to give too much respect for precedence and expert witnesses, even when the precedent or expert testimony fails common sense tests and it is possible that these valuations, while abysmal, will pass the legally defensible test. This is something that you ought to consider doing when a Binary Options merchant, as the monetary profits you can make out of each and every exchange you do choose to place can and frequently will shift from Broker to Broker.
Not quite! As you can see, even within the CAPE story, there are holes, largely depending upon what time period you use for your averaging. The current CAPE of 27.27 is well above the historic average of 16.06 and if you buy into the notion of mean reversion, the case makes itself, right? Current economic data may look ominous, with unemployment nearing 15%, consumer spending in a ditch and famous companies such as J.C. So, for the many companies that do bad deals and need an investment banking sign-off on that deal (in the form of a fairness opinion), you will have no trouble finding a banker who will accommodate you. In fact, I have long argued that bankers are the lubricants of a market economy, working through kinks in the system and filling in capital market needs and defended banking against its most virulent critics. That said, the banking work done on deals like the this one vindicate everyone’s worst perceptions of bankers as a hired guns who cannot shoot straight, more Keystone Kops than Wyatt Earps!
There are many who warn us that boutiques s are overheating and that a fall is imminent. As stocks hit one high after another, the stock market looks like Superman, soaring to new highs and possessed of super powers. After all, his powers come from his origins (that he was born in Krypton) and not from his outfit and the cape seems to be more of an aerodynamic drag than an augmentation. For those who don’t quite grasp what the CAPE is, it is the conventional PE ratio for stocks, with two adjustments to the earnings. Some of this worrying is natural, given the market’s rise over the last few years, but there are a few who seem to have surrendered entirely to the notion that stocks are in a bubble and that there is no rational explanation for why investors would invest in them. The last group (rational bubblers) are generally sensible people, who having fallen in love with a market metric, are unable to distance themselves from it.