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And Now The Bull's Turn: Jeremy Siegel Explains "No Way There Is A Bubble, No Signs Of Recession"

Tyler Durden's picture




 

Having detailed the less status-quo-sustaining side of things, thanks to some frankness from Nobel Prize winner Robert Shiller, who warned "unlike 1929, this time everything - Stocks, Bonds and Housing - is overvalued," we thought it only fair-and-balanced to illustrate the alternative perspective and who better than Jeremy Siegel to deliver it. In his anti-thesis of Shiller's facts, Siegel unleashes textbook dogma to pronounce, "in no way do current levels quality as a bubble", that stock returns should remain supported by fundamentals, there is no sign of a recession in the next 18 months, The Dow's fair-value currently is 20,000, and "not much" could dissuade him from holding stocks.

Below is an interview he gave to Goldman Sachs' Allison Nathan

Allison Nathan: You have long argued the benefits of a buy-and¬hold strategy for stocks. But do stocks look overvalued today?

Jeremy Siegel: Looking at current P/E ratios and interest rates, I find that stocks are only slightly above their historical valuations today. The average long-run P/E ratio of the S&P 500, going back to the 19th century, is about 15.0x earnings. Over the last 60 years, in the post-war period, the S&P 500 has averaged around 16.5x earnings. Today it is between 17.5 and 18x. So it is just a bit above its historical level. That level is completely justified; in fact, even perhaps a higher level is justified, given the low level of interest rates.

Allison Nathan: What is your response to those who say the US equity market is in a bubble or on its way?

Jeremy Siegel:  I completely disagree. A bubble implies a very significant overvaluation. The stock market was most certainly in a bubble in March of 2000, when the S&P 500 was selling at 30x earnings, and the technology sector of the S&P 500 was selling at nearly 100x earnings. In no way do current levels that are nowhere near those highs qualify as a bubble.
 
Allison Nathan: The CAPE ratio created by your longtime friend and colleague—Robert Shiller—and often viewed as a useful valuation tool is showing material overvaluation. What are your thoughts?

Jeremy Siegel: I have great respect for Bob Shiller and his CAPE ratio, which uses a 10-year average of earnings against price to assess the valuation of a company. The problem is that starting in the late 1990s, Standard & Poor's changed the way that it computed earnings; it went to a mark-to-market orientation, which sharply depressed earnings in recessions. Since the last ten years of earnings encompass the Great Recession, when earnings plunged close to zero, earnings appear far below what I think they should be, which inflates the CAPE ratio way above what I think is the true value. To adjust for this problem, I have done some work instead using a 10-year average of the National Income Product Accounts (NIPA) income estimates rather than the S&P's earnings estimates. Once you make that substitution you get far less overvaluation of the market now than you do under Shiller's valuation.

{ZH: It's Different This Time... "the old metrics don't work..."]

Allison Nathan: Is the real bubble in the bond market?

Jeremy Siegel: With interest rates generally at all-time low levels and likely set to rise, I think it is fair to say that bonds are now overvalued and much more so than stocks. However, I do not see short or long-term interest rates returning to anywhere near their post-World War II average. In fact, it's my feeling that we will see rates remain around 2.0% on the short end, maybe even a little less; and 3.0 to 3.5% on the long end. Given that there are some very persuasive reasons why interest rates are low and will stay relatively low in the future, I wouldn't necessarily call the bond market a bubble.

Allison Nathan: To what extent does valuation impact future equity returns?

Jeremy Siegel: I find that the future real returns on stocks are linked to the earnings yield on the market. And the earnings yield on the market is nothing more than the reciprocal of the price/earnings ratio, E over P. So a P/E of 18 suggests a 5.5% earnings yield or real return; a P/E of 20 suggests a 5.0% real return. So as stocks sell for higher prices, it does mean their forward-looking returns will fall short of the long-term average, which I have found to be about 6.5% per year after inflation.

Allison Nathan: How much more will multiples expand?

Jeremy Siegel: That depends on what happens to interest rates. Although interest rates are going to rise, I think that rise will be moderate. And therefore I expect equities to continue to sell above their long-term average valuation ratios. I definitely think that a 20 P/E ratio is justified by the current level of interest rates. That does not mean these levels will be reached anytime soon; it may take a year or two to reach that level. But I do still see upside to the stock market from expanding P/E ratios over the next 12 months.

Allison Nathan: Does the fact that US profit margins are at all-time highs concern you?

Jeremy Siegel: It doesn't really worry me. There are several reasons for very high profit margins, which actually did decline a bit last quarter. One is the increased percent of foreign sales of US corporations. Because tax rates are lower outside of the United States, higher foreign sales raise profit margins. Also, the technology sector, which has a high profit margin because of the intellectual capital involved, is becoming a bigger part of the S&P 500. Very low interest rates and relatively low leverage at firms has also helped profitability. In most cases, these factors completely explain the record-high profit margins and are unlikely to reverse anytime soon. I think that we will see secularly higher margins because of the interest rate structure and the percent of foreign sales for many years to come.

Allison Nathan: How much upside to stock index levels do you expect?

Jeremy Siegel: I think that the fair market value of the Dow, given current circumstances, is about 20,000. We are at roughly 18,000 today, which implies more than a 10% increase in prices. Again, we may not get that in the next six or even 12 months. But I do think that given the likely persistence of relatively low interest rates over the next several years, a 20,000 level on the Dow can certainly be justified.

Allison Nathan: If interest rates stayed where they are today, and the Dow reached 20,000 within a couple of months—crazier things have happened—would you advise investors to sell their stocks?

Jeremy Siegel: I think that you would need an improvement in what have been some very disappointing earnings numbers over the last six months in order to see that kind of move. But even if we did, I would not recommend that people sell. At that point, you would have only reached fair market value, depending on your expectations for interest rates and earnings into the future. So I don't think we would be in a dangerous or bubbly situation. Of course, stocks can be tremendously volatile in the short run. So even though the fair value might be 20,000, the index may fall to 17,000, or may rise to 23,000 in the short run. There can be a lot of variation around the justified market value.

Allison Nathan: How concerned are you about the prospect of a meaningful correction in the near term, perhaps triggered by the approach of US rate hikes?

Jeremy Siegel: The market has pushed off its expectations for Fed liftoff to September. Any news that the Fed will hike earlier will be disturbing to the market. And we have not had a correction in the market—meaning 10% or more—for many, many years. I would not have been altogether surprised if one had happened in the first half of this year, but so far we have held in very well. Investors are looking forward to an earnings improvement, getting out of the relative slump that we saw in the first quarter. And so as long as the Fed's timetable does not seem to accelerate to a June increase, I would not expect a 10% correction in the near term. But if we did see a correction, I would view it as a buying opportunity.

Allison Nathan: What else might trigger a correction beyond interest rate risk?

Jeremy Siegel: Another significant leg of appreciation in the US dollar would be bearish for US equities, which are already contending with a 20% increase over the last year. OH prices have also started to rise again. If Brent crude oil stays in the $60 to $70 range, I think that would be healthy for the market in the long run. But there has been so much volatility in the oil price that that could also foster volatility in the equity market.

Allison Nathan: What about a scenario of continued weak economic growth and rate hikes pushed off into 2016? How vulnerable would that leave the equity market?

Jeremy Siegel: In that scenario, the risk would be on the profit side rather than on the interest rate side. The impact on the US equity market would depend on the source of the disappointment and whether it was just a US slowdown or a global slowdown. But if the Fed recognizes the slowdown and pushes off tightening, that would obviously moderate any correction in the equity market. Certainly a recession would drive down equity prices. But there are just no signs at all that I see of a recession in the next 12 to 18 months.

*  *  *

[ZH: nope none at all...]

Retail Sales are weak - extremely weak. Retail Sales have not dropped this much YoY outside of a recession...

 

And if Retail Sales are weak, then Wholesalers are seeing sales plunge at a pace not seen outside of recession...

 

Which means Factory Orders are collapsing at a pace only seen in recession...

 

And Durable Goods New Orders are negative YoY once again - strongly indicative of a recessionary environment...

 

Which is not going to improve anytime soon since inventories have not been this high relative to sales outside of a recession

 

In fact, the last time durable goods orders fell this much, The Fed launched QE3 - indicating clearly why they desperately want to raise rates imminently... in order to have some non-ZIRP/NIRP ammo when the next recession hits.

And just in case you figured that if domestic prosperity won't goose the economy, Chinese and Japanese stimulus means the rest of the world will save us... nope!! Export growth is now negative... as seen in the last 2 recessions.

 

And deflationary pressures (Import Prices ex-fuel) are washing upon America's shores at a pace not seen outside of a recession...

*  *  *
Allison Nathan: What do you make of the boost to equity prices from large share buyback programs? Does that concern you at all?

Jeremy Siegel: I am very favorable towards buybacks. I think they tell you that firms are making good profits, which they want to return to shareholders. It also means that firms don't see a lot of very profitable opportunities to invest in right now, given slow global GDP growth. But that's not necessarily bad. Giving cash back to shareholders is a very effective way to generate value in the equity market. And with the substantial amount of slack in the global economy today, I would worry that expansion in plant equipment would be overinvesting, which would not be a good use of shareholder money. The reality is that there is not a lot of persuasive technology for firms to invest in today. But I view that as a temporary pause and not necessarily detrimental; if world demand expands or new technologies emerge that would be profitable for companies, I am confident that they would deploy cash effectively for shareholders.

Allison Nathan: Do you find foreign equity markets even more compelling than the US market?

Jeremy Siegel: I think that European equities are persuasive right now. I do believe that Euro depreciation is largely over; I expect the EUR/$ to trade in the 1-1.10 range in the future. And European equity valuations have increased dramatically. They were selling 10-12x earnings, and are now selling around 15¬17x. But that is still about 10% below US levels. Japan also looks relatively attractive. Although Japanese stock prices have increased tremendously, so have earnings. So Japanese P/E ratios remain around 15-17x earnings, which is a compelling range given current interest rates. And emerging markets in particular could be the best performing markets in the next three to five years given that their valuations have declined significantly in recent corrections and that their currencies are now selling at a very reasonable price relative to the dollar.

Allison Nathan: So would you recommend investors overweight emerging markets and/or foreign equity markets in their portfolios today?

Jeremy Siegel: It depends on risk preferences. But I would still generally recommend an allocation of roughly 50% US, 25% non-US developed market and 25% emerging markets.

Allison Nathan: What—if anything—would dissuade you from holding equities over the medium term?

Jeremy Siegel: Not much. There is always the potential for unexpected shocks such as terrorist attacks or natural disasters that could hit stocks dramatically. That is one of the reasons why many people shy away from them. But it is also the reason why investors who are brave enough to hold them through tough times end up with superior returns. And today I believe that prices are low enough that investors will likely be paid quite handsomely over time to hold risk in equities.

[ZH: yep, everything looks good here...]

 

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Sun, 05/31/2015 - 15:31 | 6149748 Motorhead
Motorhead's picture

Charts, bitchez!

Sun, 05/31/2015 - 15:53 | 6149810 Silver Bul
Silver Bul's picture

I’ll go with Shiller and the PE ratio, which screams bubble.  No sign of a recession,  except it is already half way there with the latest GDP numbers. The only way you could say such things is if you want to support a rate increase, the results of which will give the central planners an opportunity to do what they really want to, ban cash and implement negative rates. 

Sun, 05/31/2015 - 16:05 | 6149839 remain calm
remain calm's picture

When Siegel fucked Bernanke in the ass, they produced Joe La Vorgna

Sun, 05/31/2015 - 16:07 | 6149847 eatthebanksters
eatthebanksters's picture

Sounds like Bullishit to me...

Sun, 05/31/2015 - 17:03 | 6149994 Son of Loki
Son of Loki's picture

He's another sign of some serious dementia ... or ... moral decay [stooping over to be butt-plugged by the bankers].

Sun, 05/31/2015 - 17:48 | 6150133 joseJimenez
joseJimenez's picture

It does not sounds it is bullshit.  Meanwhile back on the Titanic; Iceburg what Iceburg??

Sun, 05/31/2015 - 19:29 | 6150357 Mentaliusanything
Mentaliusanything's picture

Smartest Paid clown in the room .... It hard to understand something when your very existence demands you do not.

Mon, 06/01/2015 - 01:51 | 6151025 Colonel Klink
Colonel Klink's picture

In other words Jeremy Siegel is a prime example of another lying jew.

Sun, 05/31/2015 - 15:31 | 6149750 johngaltfla
johngaltfla's picture

Crack don't smoke itself.

But apparently so-called leading "economists" and market advisors are willing to sniff Janet's crack and keep the grand illusion going.

Sun, 05/31/2015 - 15:40 | 6149776 wendigo
wendigo's picture

Once whilst under the influence of alcohol and LSD, taking a hit of crack seemed like a good idea. Looking back, it wasn't the worst high I ever had, but not the best either. People who use it recreationally should move on to better drugs. 

Sun, 05/31/2015 - 15:51 | 6149808 Motorhead
Motorhead's picture

Wow, then they really MUST be desperate....whew, perish the thought!

Sun, 05/31/2015 - 15:33 | 6149754 knukles
knukles's picture

OK, great.  It's been ages.  We should get together and catch up some time. 

Sun, 05/31/2015 - 15:34 | 6149758 B2u
B2u's picture

Fuck you Siegel

Sun, 05/31/2015 - 16:02 | 6149837 tony wilson and...
tony wilson and saturn zion devils's picture

steady on now honey know need for antisemitism dr siegel is irish from killarney same town village as john kerry of dublin

Sun, 05/31/2015 - 19:30 | 6150362 Mentaliusanything
Mentaliusanything's picture

Dat be John Kerry of Hobblin :)

Sun, 05/31/2015 - 15:35 | 6149759 JustObserving
JustObserving's picture

Jeremy Siegel has always been a liar and a shill for the lies of the Fed.  Maybe, he hopes to become Fed chairman if he lies long and often enough.

Only the scum rises to the top in the land of the free. So Jeremy is well qualified.

Sun, 05/31/2015 - 15:53 | 6149813 t0mmyBerg
t0mmyBerg's picture

He is a caricature of himself.  This is the same guy calling for Dow 30,000 in 1999, or 15 years ago.  He did not appear too frequently during the big downturns in 2001 and 2008.  But they love to feature him when the market is on Fed crack. 

He is usually on the Fringe but I recall a few weeks ago they had some woman on from a big money management firm and she seriously said the NASDAQ was in the 1st inning!  The 1st Inning!!!!!.  Now can anyone look at a chart of the Nasdaq and say honestly it could be the 1st inning?  I mean ffs.  That would imnply a terminal 9th inning level of about 20,000 for the Nas or something.  I mean when looking at a 9x from the 300% already achieved who is counting.  I got a chuckle out of that one.  Siegel is of a piece with that kind of meme.

Sun, 05/31/2015 - 21:47 | 6150644 chokeNpuke
chokeNpuke's picture

What dumb ass gave you a -1...show yourself PUNK!

Sun, 05/31/2015 - 21:47 | 6150645 chokeNpuke
chokeNpuke's picture

What dumb ass gave you a -1...show yourself PUNK!

Sun, 05/31/2015 - 15:59 | 6149761 lasvegaspersona
lasvegaspersona's picture

Just take the 'No Worries' pill...like Bob did....err Jeremy...Bob is still worried.

Sun, 05/31/2015 - 15:36 | 6149764 trueFacts
trueFacts's picture

I think the fair market value of the dow is 45,000, so there! I win, because my number is bigger and better than his.  PLease put me on CNN as an economist and expert.

Sun, 05/31/2015 - 15:39 | 6149773 ebworthen
ebworthen's picture

No sign of a recession on Wall Street, nor in Washington.

Never mind that every Main Street is going the way of Detroit.

Sun, 05/31/2015 - 15:47 | 6149801 847328_3527
847328_3527's picture

"There's never been a better time then now to be a Banker."

Sun, 05/31/2015 - 15:40 | 6149775 Sudden Debt
Sudden Debt's picture

The crash will be different this time. Now, there are a lot less retail buyers in fhe market and a lot more funds who are in.

Panick will be panick but now it will be a sovereign problem who are still on the hook for all that crap because a few politicians made it possible in return for a new car, a swimmingpool and a few hookers with blow.

There’s still a shitload of countries who are liable for all the derivative crap of those banks and the costprice will be about 350% of their GDP.

So when it crashes, the real shit will happen exactly 12 months later, making it totally impossible to recover without a full reset. And that might take decades before they allow it because the capital will fight like a cat in a corner.

Sun, 05/31/2015 - 15:42 | 6149784 Mini-Me
Mini-Me's picture

Give the man a pair of pom-poms to accompany his cheerleading chants.  What a tool.

Sun, 05/31/2015 - 17:28 | 6150081 Monty Burns
Monty Burns's picture

He's not a tool.  He knows what's going on and has already organized himself so that he'll profit from it and the rest of us will lose.

We're the tools.  

Sun, 05/31/2015 - 15:43 | 6149788 Kreditanstalt
Kreditanstalt's picture

How exactly are we to know how many people's jobs, how much spending, how many asset prices etc., are because of EXPANSION OF THE MONEY SUPPLY???

Misallocation of capital: This whole "economy" might well be 50% FAKE.

Bubble, bubble, bubble...

Sun, 05/31/2015 - 15:44 | 6149790 holdbuysell
holdbuysell's picture

 

 

 

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

- Upton Sinclair

Sun, 05/31/2015 - 15:46 | 6149798 Kirk2NCC1701
Kirk2NCC1701's picture

Ah, J's Siegel* of Approval.  Look for the (K) logo.

* 'Seal' in Yiddish

Sun, 05/31/2015 - 16:02 | 6149836 RagnarRedux
RagnarRedux's picture

No doubt he shares a heritage with Benjamin "Bugsy" Siegel and Meyer Lansky.

Sun, 05/31/2015 - 17:26 | 6150071 Monty Burns
Monty Burns's picture

On the rocky Atlantic outpost where I live seagulls come in and shit on my house all the time.

Now I wonder what put that thought into my mind?  (Scratchin' ma haid...).

Sun, 05/31/2015 - 15:58 | 6149825 huggy_in_london
huggy_in_london's picture

I have to chuckle every time i read a stock bull tell me that no way are stocks in a bubble, but bonds?  Sure, they are ina huge bubble.  Well, I have news for these guys ... if bonds are in a bubble that pops, it will take stocks with them.  No if's or but's.  So its sheer folly to try to create a diversion to expensive stocks by claiming bonds are in a worse predicament. 

Sun, 05/31/2015 - 16:02 | 6149834 ms8173
ms8173's picture

It would be nice to read an article like this about Jeremy Segal's thoughts then the bottom fall out of it next week!  LOL

Sun, 05/31/2015 - 16:08 | 6149842 Atomizer
Atomizer's picture

Jeremy Siegel received a D- in economic GDP charting. Leave no child left behind advanced to Nobel Prize winner. 

Sun, 05/31/2015 - 16:07 | 6149846 Bill of Rights
Bill of Rights's picture

And now for something entierly different porn stars with Goggles

Adult film performers, regulators clash over safety standards on porn sets

http://www.dailynews.com//health/20150524/adult-film-performers-regulato...

Sun, 05/31/2015 - 16:13 | 6149858 TeethVillage88s
TeethVillage88s's picture

There are plenty of Bubbles: Federal Spending Bubble, Private Bank Credit Bubble, Private Bank Money Creation Bubble, Credit Card Bubble, Student Loan Bubble, Health Care Cost Bubble, Education Cost bubble,... Labor Bubble.

- Having Open Borders to drive down Labor Rates, while Investing in Foreign Goods & Services, and not investing in Domestic Jobs... Either makes you Ignorant or Blind.

The Author Jeremy Siegel wants you to believe he is Blind. Actually he is a Propagandist for the Bankers, Lawyers, Lobbyists and Politicians.

Bank Private Credit to GDP for United States
2011: 55.47615 Percent (Data spans from 1961 to 2011, Bubble is clear in 2003)
http://research.stlouisfed.org/fred2/series/DDDI01USA156NWDB

http://www.bea.gov/newsreleases/international/intinv/iip_glance.htm (wow huge trend, $31 Trillion in Foreign Property in USA vs $24 Trillion)

Series Id: LES1252881600,
Seasonally Adjusted, Constant (1982-84) dollar adjusted to CPI-U- Median usual weekly earnings, Employed full time, Wage and salary workers, All Industries, All Occupations, Both Sexes, All Races, 16 years and over,All educational levels, Wage and salary workers, Employed full time

Download:
Year Qtr1 Qtr2 Qtr3 Qtr4
1979 335 335 330 326
1980 321 315 319 315
1981 314 311 309 312
1984 313 312 313 316
1994 316 317 314 314
2000 334 334 335 334
2006 332 329 334 337
2007 336 335 336 332
2013 337 339 338 338
2014 341 337 341 340
2015 341

Where is the Money Going, JEREMY!!!

Total-Federal Government Actual Budget 2014 = $3.5 Trillion (B. Obama)
Total-Federal Government Actual Budget 1997 = $1.6 Trillion (B. Clinton)

Sun, 05/31/2015 - 16:15 | 6149866 besnook
besnook's picture

i want his drugs. they are better than mine.

Sun, 05/31/2015 - 16:46 | 6149947 LukeCV
LukeCV's picture

This guy is into pharma and some heavy shit.

I like weed, MDMA and some LSD to always keep my mind in deep shit.

Sun, 05/31/2015 - 16:19 | 6149879 Tim Knight from...
Tim Knight from Slope of Hope's picture

Funny, he doesn't look Druish {ref: Spaceballs}

Sun, 05/31/2015 - 16:22 | 6149886 FreeShitter
FreeShitter's picture

Just remember, The Tribe shows no mercy.

Sun, 05/31/2015 - 16:37 | 6149930 DOGGONE
Sun, 05/31/2015 - 16:42 | 6149940 zeroaccountability
zeroaccountability's picture

MOST people live their entire lives in a delusional state. This man appears to be no exception.

Sun, 05/31/2015 - 16:44 | 6149944 jimfcarroll
jimfcarroll's picture

If there were no Jeremy Siegel's out there then this wouldn't be a bubble. We need the majority of the talking heads to blissfully ignore the obvious; that's the true indication of a bubble.

This reminds me of the CNBC Schiff, Laffer debate.

Sun, 05/31/2015 - 16:58 | 6149977 moneybots
moneybots's picture

"The Dow's fair-value currently is 20,000..."

 

Based on what, massive financial fraud? 

 

If the fair value is 20,000, why did the G20 change the rules for depositors? if the fair value is 20,000, why did Jamie Dimon heavily lobby for a congressional bill, placing the tax payers on the hook for massive derivative losses by the Big Banks?

No, the fair value of the DOW is nothing close to 20,000 when the truth comes out.

Sun, 05/31/2015 - 17:00 | 6149986 moneybots
moneybots's picture

"Jeremy Siegel: I am very favorable towards buybacks. I think they tell you that firms are making good profits, which they want to return to shareholders."

 

Not when they are borrowing billions in order to buy back stock.

Sun, 05/31/2015 - 17:01 | 6149988 NoWayJose
NoWayJose's picture

Here is a man who lives in and visits New York, Los Angeles, Lindon and Paris - so of course he sees no recession. Likewise, he still believes in the government adjusted numbers that he sees. In his small world, all is well - for now...

Sun, 05/31/2015 - 17:21 | 6150057 Monty Burns
Monty Burns's picture

Don't be naive. He doesn't believe any of this crap. He just profits from it.

Sun, 05/31/2015 - 17:10 | 6150014 WTFUD
WTFUD's picture

He doesn't believe ANY of the shit dripping from his mouth, his life, livelihood are at stake and the parasite will still be reading from the Cabal script on the way to the gallows.

Never seen it coming ( depression ) , i was hanging out the washing. Gimme a fucking break.

I would love to get my hands around the throats of these trolls , shills and gravediggers. Just enough pressure to make them pass out though ,so as not to take away their date with destiny and enough time to make their peace with satan.

Sun, 05/31/2015 - 17:10 | 6150015 Government need...
Government needs you to pay taxes's picture

Unprecedented QE/interest rate suppression is THE driver of equity PE valuation.  None of this is real.  Sure, you can grow trees in the sky. . .

Sun, 05/31/2015 - 17:13 | 6150016 Uber Vandal
Uber Vandal's picture

Some excerpts from F. L. Allens classic Only Yesterday:

http://xroads.virginia.edu/~HYPER/ALLEN/ch12.html

The speculative fever had been intensified by the action of the Federal Reserve System in lowering the rediscount rate from 4 per cent to 3'/2 per cent in August, 1927, and purchasing Government securities in the open market. This action had been taken from the most laudable motives: several of the European nations were having difficulty in stabilizing their currencies, European exchanges were weak, and it seemed to the Reserve authorities that the easing of American money rates might prevent the further accumulation of gold in the United States and thus aid in the recovery of Europe and benefit foreign trade. Furthermore, American business was beginning to lose headway; the lowering of money rates might stimulate it. But the lowering of money rates also stimulated the stock market. The bull party in Wall Street had been still further encouraged by the remarkable solicitude of President Coolidge and Secretary Mellon, who whenever confidence showed signs of waning came out with opportunely reassuring statements which at once sent prices upward again.

http://xroads.virginia.edu/~HYPER/ALLEN/ch13.html

In view of what was about to happen, it is enlightening to recall how things looked at this juncture to the financial prophets, those gentlemen whose wizardly reputations were based upon their supposed ability to examine a set of graphs brought to them by a statistician and discover, from the relation of curve to curve and index to index, whether things were going to get better or worse. Their opinions differed, of course; there never has been a moment when the best financial opinion was unanimous. In examining these opinions, and the outgivings of eminent bankers, it must furthermore be acknowledged that a bullish statement cannot always be taken at its face value: few men like to assume the responsibility of spreading alarm by making dire predictions, nor is a banker with unsold securities on his hands likely to say anything which will make it more difficult to dispose of them, unquiet as his private mind may be. Finally, one must admit that prophecy is at best the most hazardous of occupations. Nevertheless, the general state of financial opinion in October, 1929, makes an instructive contrast with that in February and March, 1928, when, as we have seen, the skies had not appeared any too bright.

 

As one can clearly see, NOTHING has changed at all since the 1920's, even earlier. When I first read that book, I could have sworn I was reading recent ZH articles, just swap out the names and dates, it's all the same.

 

Sun, 05/31/2015 - 22:37 | 6150741 MrSteve
MrSteve's picture

great reference to the undisputed core record of social history prior to The Crash, thanks for the links

Sun, 05/31/2015 - 23:56 | 6150874 Livermore Legend
Livermore Legend's picture

Indeed...

Excellent Cite to a Must Read.....

The Widespread Belief that 2008 = 1929 constitutes an "Extraordinary Popular Delusion".

1929 is Ahead.......

As Posterity Will Record....

Sun, 05/31/2015 - 17:12 | 6150023 q99x2
q99x2's picture

Fraudster Fraudster Fraudster

Sun, 05/31/2015 - 17:19 | 6150042 Monty Burns
Monty Burns's picture

Confirms the old aphorism about the MSM.  One Jew being interviewed by another Jew on a Jewish-owned TV station on a subject of interest to Jews. All financed by the dumb goyim.

Sun, 05/31/2015 - 17:33 | 6150096 hadriansnightmare
hadriansnightmare's picture

Worthless- answer to stock buy backs

Sun, 05/31/2015 - 17:33 | 6150106 highwaytoserfdom
highwaytoserfdom's picture

Jeremy Siegel: Putz extraordinaire DEFAULT

I am very favorable towards buybacks GDP profits declined 8.7 percent

Wharton School of the University of Pennsylvania in Philadelphia, Pennsylvania The average debt burden of a Wharton grad is a whopping $105,489, according to U.S. News   

DON'T PAY THESE IDIOTS A PENNY.

Sun, 05/31/2015 - 17:42 | 6150126 Shirley Swanepoel
Shirley Swanepoel's picture

Corporate crackhead.

Sun, 05/31/2015 - 18:18 | 6150187 devilsdictionary
devilsdictionary's picture

I know it sounds as crazy as hell, but what if Shiller's CAPE is wrong?

 

 

Sun, 05/31/2015 - 18:34 | 6150219 Hongcha
Hongcha's picture

Siegel has been right for six straight years and made his clients a ton of money.  And every RRE bull you know has also been right and made themselves rich, since 2009.

All the cautious guys got left outside with their noses pressed against the window.

 

Mon, 06/01/2015 - 22:54 | 6154169 rex-lacrymarum
rex-lacrymarum's picture

All permabulls are historically right precisely 66.5% of the time (the stock market rises over two thirds of the time that passes, due to constant monetary inflation). The problem is the 33.5% of the time when they are wrong.

Sun, 05/31/2015 - 18:36 | 6150229 VW Nerd
VW Nerd's picture

In a nutshell, what Siegel describes is lots of hope and make pretend (modeling that excludes GAAP and mark to market for establishing earnings data).  Under his tortured modeling, Netflix is a screaming buy at 160 PE and 0 yield.  

Sun, 05/31/2015 - 18:42 | 6150248 devilsdictionary
devilsdictionary's picture

Now this is funny. How to be seriously wrong with CAPE written by the never boring Henry Blodget in March 2010. Priceless.

Sun, 05/31/2015 - 18:47 | 6150262 GRDguy
GRDguy's picture

Life etches faces; to me, this guy looks like someone who would swindle his own mother?

Sun, 05/31/2015 - 18:58 | 6150275 Cityzerosix
Cityzerosix's picture

Surely its H.P.Lovecraft?   At the Mountains of Madness?

Sun, 05/31/2015 - 23:53 | 6150871 JoWazzoo
JoWazzoo's picture

ROTFLMFAO.  Thanks - I needed a good laff.  What a fuck head.

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