We’re in the third biggest stock bubble in U.S. history

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July 17, 2014, 7:27 a.m. EDT

We’re in the third biggest stock bubble in U.S. history

By Brett Arends, MarketWatch

Getty Images
New York Stock Exchange traders, October 1929.
Here’s a quick question for you. What do the following years have in common:

1853, 1906, 1929, 1969, 1999

Pass the question around your office. Call your money manager and ask him or her, too. Post it on your office notice board.

Give up?

Those were the peaks of the five massive, generational stock-market bubbles in U.S. history.

Investors who bought into stocks around those peaks ended up earning terrible returns over the subsequent 30 years. Forget “stocks for the long run.” They ended up with “stocks for a long face.” The bigger the bubble, the worse returns.

And, according to a new research report, we are back there again.

U.S. stocks are now about 80% overvalued on certain key long-term measures, according to research by financial consultant Andrew Smithers, the chairman of Smithers & Co. and one of the few to warn about the bubble of the late 1990s at the time.

The five dates listed at the start of this article, he says, are the only times since 1802, when data began being tracked, when stocks have been 50% or more overvalued according to these measures. And only two of those bubbles — 1929 and 1999, both of which were followed by disastrous crashes — were bigger than today.

That’s right: According to Smithers’s data, we are now in the third biggest bubble in U.S. history. (Oh, to jump ahead slightly, he also suspects it will go up even further before it comes back down.) http://www.marketwatch.com/story/were-i ... MW_popular

[mrgravyard49]

http://www.reuters.com/article/2014/10/ ... BI20141023

[BeTheMoon]

All markets are a bubble (segment) to some degree.