I have to admit - when I wrote that piece a few weeks ago, confidently declaring that the market was not a bubble, I didn't feel terribly comfortable about it. But now that a lot of rather famous people have come out saying the same thing, I guess I can feel better about being involved in this (potential) case of groupthink (that's sarcasm in case it doesn't come through - I actually still don't feel comfortable about declaring this to not be a bubble even if my reputation is on the line with a bunch of much more credible and famous people).
The latest memo from Howard Marks includes a long and thoughtful discussion about the present day markets, but he concludes with similar thoughts - this is not a bubble.
- "Prices and valuation parameters are higher than they were a few years ago, and riskier behavior is observed. But what matters is the degree, and I don't think it has reached the danger zone yet."
- "The absolute quantum of risk doesn't seem as high as in 2006-7."
- "The modern miracles of finance aren't seen as often (or touted as highly), and the use of leverage isn't as high."
- "Prices and valuations aren't highly extended (the P/E ratio on the S&P 500 is around 16, the post-war average, while in the 2000 it was in the low 30s."
- "I think most asset classes are priced fully - in many cases on the high side of fair - but not at bubble-type highs."
H/t Doug Kass
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from SeekingAlpha.com: Home Page http://seekingalpha.com/article/1865721-howard-marks-this-is-not-a-bubble?source=feed
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