Decline Barely Started

Image placeholder title

Despite the rout, the S&P is just barely down for the year.

Expect a "Lost Decade"

Image placeholder title

Why?

Image placeholder title

The Shiller PE Ratio also known as "CAPE", the Cyclically Adjusted Price-Earnings Ratio, is in the stratosphere. It's not a timing mechanism, rather it's a warning mechanism.

RECOMMENDED ARTICLES

The main idea is that earnings are mean reverting.

On that basis, stocks are more overvalued than any time other than the DotCom era.

But that is misleading. In 2000 there were many sectors that were extremely cheap. Energy was a standout buy then. So were retail and financials.

It's difficult to find any undervalued sectors now other than gold.

Financial Crisis Coming

At 1:40 AM (this morning), I posted Eight Reasons a Financial Crisis is Coming.

It's been about 10 years since the last financial crisis. FocusEconomics wants to know if another one is due. The short answer is yes.

Click for details.

Mike "Mish" Shedlock