Backhand Short Selling Stocks With Too Bad Profits.

The overall dynamic price to earnings ratio of the S & P 500 is 17.2 times, and in the past 40 years, only 1997-2000 of the tech bubble era has seen higher valuations, when the P / E ratio was 18 times.

Other indicators also show that the stock market is overvalued, and each time the deviation is too large, there will be a return to the historical average. Therefore, investors can backhand and focus on those stocks whose profits are not good enough.

On Tuesday, the three major indexes in the United States varied, the Dow rose 0.33%, and the NASDAQ fell 0.22%.

Big banks such as JP Morgan and Wells Fargo were better than analysts expected, but the US retail sales and PPI figures were not as good as expected in March, and the optimism index for small businesses fell to a 9 month low.

MarketWatch columnist L.A. Little wrote today that there are indicators indicating that the market is extremely optimistic and seriously overestimated. The degree of madness can be included in the annals. Goldman Sachs believes that the comprehensive valuation of the US stocks has been second in the history of the world, and the phased adjustment is ready at any time. Investors are advised to short the 4 shares.

Little writes that at present, the US stocks are extremely overbought, and have only been in the past 40 years.

+ bubble period has been higher valuations, such crazy state has only appeared 7 times in the past 100 years, and the first 6 times ended in bear market without exception.

Not only the high valuations, the United States

For a long time, it has been insulated from the 10% adjustment range. Under normal circumstances, the US stock market will undergo a 10% adjustment once a year. At present, the US stock market has not had a decent adjustment in 3 years.

Well Capital analyst Jim Paulsen believes that in the past 3 years, the US stock market's rising trend is particularly strong and its volatility is also low. Such a steady climb is undoubtedly the proof of the high sentiment of investment.

at present

Sentiment has been at a high level since 1900, and investor sentiment is an important factor affecting stock market volatility.

In the past 100 years, the investor sentiment index has only been 14 times higher than 90%, and now the index is slightly higher than 97%. However, whenever the index is above 90%, the stock market will be in big trouble. Before 13 times, there are 8 times that the stock market has entered a long bear Road, namely, 1906, 1929, 1937, 1946, 1956, 1965, 1965 and

Paulsen gives 4 valuation indicators with a comprehensive score of 79%, and has reached the state of alert.

It can be clearly seen from the above chart that every time the valuation index is too high, it is marked with the red vertical line, followed by a marked decline in the market (blue line).

In the Internet bubble period, the market peaked for 2 years, but when the valuation was so high, the market in the 98 year fell by 22% from the high point.

Goldman Sachs Goldman Sachs also issued a research report that it is difficult to find value depressions after the US stock market has gone up sharply.