Wall of Worry or Bubble?

Real estate was the “can’t lose” investment of a generation in 2007. Borrowing and consumption skyrocketed, and very few experts saw the formation of a stock market bubble. In other words, the headlines reflected growing optimism that the boom/bust cycle had been broken.

The stock market “bubbles” tend to pop when least expected. That is, when headlines are saturated by economic and financial optimism after years of rising prices.

Large Cap Stocks Capital Appreciation Index (LCSCAI) and Z Scores from Primary Trend (48 Month)


Headline: After historic gains, are stocks nearing a bubble?

Federal Reserve Chairman Ben Bernanke fielded the usual questions about inflation, tax cuts and government debt during a trip to Congress last week. Then a new question popped up: Is the Fed creating another bubble in stock prices?

Bernanke told the Senate Banking Committee he saw "little evidence" that was happening. But he cautioned: "Of course, nobody can know for sure."

That's the problem with bubbles. You only know you're in one when it pops.

Source: finance.yahoo.com