[quote=livinincali]
Was there a bubble in the stock market based on earnings or valuations in 2007. I remember people saying the market wouldn’t be effected by sub prime because it wasn’t significantly overvalued. Of course we saw what happened. I don’t think the bubble is in stocks per say. It’s probably somewhere in the bond space, but when that bubble pops in the bond space it’s going to have devastating impacts on the stock market just like it has the previous 2 times. This stuff is interconnected, decoupling is a myth.[/quote]
PE’s were higher than now in 2007, but not astronomically. Until the bottom fell out of earnings. If I remember correctly from Schiller’s in depth analysis, we’re still at least 10% below cyclical PE when the market began its fall in Sept ’07.
I’ve heard predictions of the bond bubble popping for more than a decade now, maybe even two. It really can’t be called prescient when something is predicted for that long and it doesn’t happen.
