At the beginning of 2018, per diligent analysis of market valuation per economic conditions, noting PE ratios go down in bad times and up in good times, large and mid-cap stocks are actually around 4X overpriced. Small caps decoupled form the rest of the market, making them 6X overpriced.
The PE ratio stated for the Russell 2000 on many sites purposely exclude the massive number of corporations with negative and zero earnings. In not playing with the data, the PE ratio is well beyond 100!
Note, the real GDP growth has been deeply negative 10 years running and currently at negative 7%. This is per proper accounting of inflation and deficit spending. In fact, with an expected big increase in deficit spending, year 2018 will likely have around a negative 10% real GDP growth. Go view the article Negative 10% Real GDP Growth Unmasked written in 2012 to show how government has been lying to the people.
With an overpriced stock market, manipulated up or not, it widens the wealth divide, hurting the middle class and especially diligent investors on the correct side of fair value. With the Federal Reserve's highly egregious, unlawful upward manipulation of the stock market, the wealth divide is now at record levels, along with homelessness.
United States is in a masked economic depression, worse than the lesser depression of the 1930's on many accounts. Food stamps hide the problem. Look at the massive number of adult children having to live with their parents. The homeless camps everywhere. And besides food stamps hiding the problem in supplanting soup kitchens, soup kitchens still exist along with food pantries and are swamped being the actual economy is far more worse than the complicit media which is aligned with Wall Street and government wants you to know.
Getting more on small cap stocks, Yellen made an announcement back in 2014 stating small caps stocks were expensive. When someone of her level comes out and says something like this, you know it's much worse than what is mentioned.
Janet Yellen Warns Small caps Expensive
Noting one-third of corporations in the Russell 2000 are omitted from the fake PE ratio commonly provided by numerous stock sites:
Small Cap Stocks Expensive
In the following article, a chart is presented showing how small caps decoupled from the rest of the market and makes no sense. It began in 2009, was beginning to come down in 2010, then made a jump again, was coming down towards 2012 but upward ever since. If you cannot see the chart because of WSJ wanting money, at least you get an idea what the chart shows. From 2009 to 2014, the decoupling was so much it shows small cap valuations to get to 50% higher than that of the S&P500. As per 2018, it can then be reconciled, the claim of small caps being 6X too expensive with 4X too expensive for the rest of the market, and this is being conservative. I would contend small caps to be even more overpriced but then many would object without even wanting to discover the facts.
Small Cap Stocks Overpriced
My formal complaint to the SEC about this matter on March 5, 2018 (edited):
Small caps still freaking so overpriced. I demonstrate the mid-caps and large caps are about 4X overpriced using the reasoning I put forth in the 2012 article "2X Overpriced Stock Market". As you know the Federal Reserve's unlawful upward manipulation has cost some people lots of money - I being perhaps the biggest victim of their anti-stimulus. Piecing these sites providing useful information in garnishing a fair value for the stock market along with my newest site, http://russell2000valuation.blogspot.com/, you should recognize something foul is going on and I believe the impact of the misleading "pricing quotes", not per share price but in the PE value for the Russell 2000 must be playing a role to make small caps decouple from the rest of the market for no fundamental reason.
As I mentioned and have known for quite some time and is not just highly annoying but an outright egregious lie, even if a footnote is provided is that the investing community is misled into thinking the Russell 2000 is not so overpriced relative to the rest of the market when one-third of the corporations in the Russell 2000 have zero to negative earnings. Properly accounting for this (just like our government not calculating the real GDP growth correctly in using a contrived inflation rate and wholly dismissing deficit spending, otherwise it would be seen it has been deeply negative 10 years running and currently at negative 7% - see my 2012 article "Negative 10% Real GDP Growth Unmasked" - and this in addition to so many things is unjustly forcing rightful short sellers to lose big). The highly fraudulent scheme of the numerous financial networks all stating a false PE ratio in purposely excluding the many zero to negative earnings corporations of the Russell 2000, misleading investors into thinking they are value buying when in fact they are buying into a much much higher PE ratio ETF than disclosed. Even if such egregious activities are permitted, these massaged figures should be placed as footnotes and in the regular area, the true PE should be posted. I contend there shouldn't even be a massaged figure presented as people "investing" in the Russell 2000 are not buying into only those corporations having positive earnings, they have to buy into the congregate of 2000 corporations.
The Federal Reserve may be playing a huge role in pumping up the small caps disproportionately to the rest of the market. It appears the Federal Reserve first pumps up the small cap stocks using the Russell 2000 to juice up the market as it would take less money to accomplish this, especially in the futures market, and then once getting traction, additional money is poured into both the NASDAQ and DOW. I've seen the disparate market movements in the futures market and regular trading session to arrive at this conclusion. THERE SHOULD BE GOVERNMENTAL OVERSIGHT PREVENTING THIS ADDITIONAL MANIPULATION BEYOND THE UNLAWFUL UPWARD MANIPULATION PUSHING UP THE STOCK MARKET IN GENERAL. Many diligent investors are unduly getting affected.
**
At least some sources show a non-massaged number for the PE ratio of the Russell 2000 as seen at WSJ: Russell 2000 PE Ratio for the date March 2, 2018:
P/E RATIO 3/2/2018
Russell 2000 130.52
Nasdaq 100 26.31
S&P 500 25.23
However, look just about anywhere and you'll see reflective, a PE ratio that is misleading, one that is in the 20's.
Despite the usual stock pumping stories shown on the site, seekingalpha.com, where I use to submit articles but never could get paid for the fact that most people want to hear rosy stock pumping stories and not those speaking of the facts of an overpriced stock market, this one article gives evidence of the Russell 2000 being outrageously overpriced, with a PE ratio exceeding the tops of the prior two bubble markets: Russell 2000 Bubble. Note this article was written on or about Sep 29, 2017 and we know the market is much higher now than then which points to even more disturbingly high PE ratio, likely fueled by the vast number of market quoting sites showing a low PE ratio. Even noting Birinyi Associates being mentioned in this article as giving the forward PE estimate of about 20 for the Russell 2000. It's lots of foul smelling numbers being bandied about to try to draw even more people in to feed the extreme bubble of the Russell 2000.
Gratified David Stockman concurs with me as any DILIGENT person would know yet many are misled from financial companies pushing fraudulent numbers. In the following youtube video of Feb 7, 2018, David Stockman mentions the 150 PE ratio for the Russell 2000:
David Stockman, Trump Economy In The Midst Of phony, Fantastic, Stock Market Bubble
Surprisingly, Marketwatch has an article showing how overpriced small caps are. The date of this article is August 18, 2017, back when the PE ratio was HALF of what it is in March 2018. Gives you an idea how fanatically high the PE is and how it increased so much in such a short period of time:
Here's the Shocking Truth about the Russell 2000 PE Ratio 2017-08-18
NOTE! THIS IS NOT LIKE A FEW CORPORATIONS IN NASDAQ HAVING A PE RATIO AROUND 100, THIS IS AN ENTIRE INDEX OF 2000 STOCKS, NONE OF WHICH ARE LIKE AMAZON.COM, AVERAGING A PE OVER 100!! This is beyond ludicrous and thus government should step in to put a stop to the Federal Reserve and the many financial web sites assisting in getting people to buy into the Russell 2000 with the fraudulent posting of a PE ratio in the 20's. Diligent investors short selling the lunacy should not be forced to keep losing on account of the various modes of manipulation!
Healthy economy without Federal Reserve intervention:
Corrupt economy with society breaking, economy ruining, wealth dividing Federal Reserve anti-stimulus QE:
education
***
Much of our energy in life today is directed at trying to make money passively through financial instruments, really not contributing to society and trying to reap gains indirectly off of others. But when your intentions are, as are mine, to simply recoup bank interest the Fed took away, I say it's reasonable, even with making most modest gains passively so long as the bulk of one's income is from actual work. Society is falling apart form the greed of piling into the various asset classes and the most direct way to cause the problem is in gobbling up more homes and pushing oppressive rents onto the less advantaged. I pose solutions for much of our ills in society, particularly in relation to money as so much else follows in improvements in other areas of life when there is greater financial prosperity. Elsewhere I demonstrate through good trading techniques, one can even go against the market to gain. I proved it's possible in doubling one's money going against the market in just four months' time as I did in early 2008. I do know how to do it and stopped anyway as I felt it's an unjust way to make money. Mind you I did the demonstration with a small account, nothing big. Based on this, I felt it would take no more than $5-10K to trade up and down the market to simply recoup bank interest. Short selling was far more sensible than going long the still overpriced market in 2009, the time when the Federal Reserve forced bank interest rates all the way down to zero. I demonstrate as well the real GDP growth has been deeply negative 10 years running, but still back in 2009, without having so much data collected, everyone should have realized there were no fundamental fixes in the system to warrant a 35% jump off the low of March 2009 which is when I stepped in, reluctantly. Problem was the Fed kept manipulating up the market and never ceased yet. Their actions are of an anti-stimulus as it fleeces the middle class yet apparently much of the middle class is blind as to what's going on. The record homelessness is evidence of the ill effects of the Fed (in addition to other failed governmental policies).
WEALTH MODERATION and spend as little as you can to survive. When it appears life becomes more stable and when you see less poverty, then you can spend more of your savings. When times get rough, that's when you need to hold tight your money for greater protection. The massive wealth divide as we have here, at or nearing a third world level is crippling both society and the economy. One could opt to make less money if making tons of it and never be able to spend it in 10 or more lifetimes but it's a rarity to see anything like this. There is so much for everyone on this planet, everyone, even for the 7 billion people, and though this planet could really handle far more, just to be on the safe side and for greater freedom of movement, we should stabilize and allow the population to decrease slowly. Of course your famed economists will tell you that a declining population is terrible in that fewer working would be supporting a larger amount on social security, there would be no such issue if the important items I mention at http://proposedsolutions.blogspot.com were implemented. When poor or in the lower middle class, housing expenses presently may be 50-75% of one's social security and if higher, government may kick in more in some way, and there's a good chance when at the high end a person decides to be homeless. Do not ever think the poor are just given money and it hurts society from this alone - when given money and they spend it on rent or food, guess who it eventually helps? Sure some in the middle class get part of it but it normally gravitates to the wealthy and so you see, it's just another way how the wealthy gain - if the economy stinks and the wealthy want more and more money and the economy cannot support it, government steps in to CODDLE the wealthy. So you see, we could have government less involved if big fundamental changes were made: getting housing expenses down and then government wouldn't be having to fork over so much money! I could go on and one about this and related stuff. The fact is our overpaid leaders can't figure out solutions apart from some band-aid fix that never really addresses the underlying problems. The wealthy keep getting coddled through all the government programs, believe me on this. The program of cash for clunkers, and everything else, while it may benefit some in the populace at the expense of those who do not take advantage of the program (as is always the case), car dealers would be the biggest benefactor. How is that for making a better economy? It's more ponzi processes on top of more ponzi processes and some will get left out or KILLED as what is going on with the Fed's ANTI-STIMULUS of unlawfully manipulating up the stock market.
The PE ratio stated for the Russell 2000 on many sites purposely exclude the massive number of corporations with negative and zero earnings. In not playing with the data, the PE ratio is well beyond 100!
Note, the real GDP growth has been deeply negative 10 years running and currently at negative 7%. This is per proper accounting of inflation and deficit spending. In fact, with an expected big increase in deficit spending, year 2018 will likely have around a negative 10% real GDP growth. Go view the article Negative 10% Real GDP Growth Unmasked written in 2012 to show how government has been lying to the people.
With an overpriced stock market, manipulated up or not, it widens the wealth divide, hurting the middle class and especially diligent investors on the correct side of fair value. With the Federal Reserve's highly egregious, unlawful upward manipulation of the stock market, the wealth divide is now at record levels, along with homelessness.
United States is in a masked economic depression, worse than the lesser depression of the 1930's on many accounts. Food stamps hide the problem. Look at the massive number of adult children having to live with their parents. The homeless camps everywhere. And besides food stamps hiding the problem in supplanting soup kitchens, soup kitchens still exist along with food pantries and are swamped being the actual economy is far more worse than the complicit media which is aligned with Wall Street and government wants you to know.
Getting more on small cap stocks, Yellen made an announcement back in 2014 stating small caps stocks were expensive. When someone of her level comes out and says something like this, you know it's much worse than what is mentioned.
Janet Yellen Warns Small caps Expensive
Noting one-third of corporations in the Russell 2000 are omitted from the fake PE ratio commonly provided by numerous stock sites:
Small Cap Stocks Expensive
In the following article, a chart is presented showing how small caps decoupled from the rest of the market and makes no sense. It began in 2009, was beginning to come down in 2010, then made a jump again, was coming down towards 2012 but upward ever since. If you cannot see the chart because of WSJ wanting money, at least you get an idea what the chart shows. From 2009 to 2014, the decoupling was so much it shows small cap valuations to get to 50% higher than that of the S&P500. As per 2018, it can then be reconciled, the claim of small caps being 6X too expensive with 4X too expensive for the rest of the market, and this is being conservative. I would contend small caps to be even more overpriced but then many would object without even wanting to discover the facts.
Small Cap Stocks Overpriced
My formal complaint to the SEC about this matter on March 5, 2018 (edited):
Small caps still freaking so overpriced. I demonstrate the mid-caps and large caps are about 4X overpriced using the reasoning I put forth in the 2012 article "2X Overpriced Stock Market". As you know the Federal Reserve's unlawful upward manipulation has cost some people lots of money - I being perhaps the biggest victim of their anti-stimulus. Piecing these sites providing useful information in garnishing a fair value for the stock market along with my newest site, http://russell2000valuation.blogspot.com/, you should recognize something foul is going on and I believe the impact of the misleading "pricing quotes", not per share price but in the PE value for the Russell 2000 must be playing a role to make small caps decouple from the rest of the market for no fundamental reason.
As I mentioned and have known for quite some time and is not just highly annoying but an outright egregious lie, even if a footnote is provided is that the investing community is misled into thinking the Russell 2000 is not so overpriced relative to the rest of the market when one-third of the corporations in the Russell 2000 have zero to negative earnings. Properly accounting for this (just like our government not calculating the real GDP growth correctly in using a contrived inflation rate and wholly dismissing deficit spending, otherwise it would be seen it has been deeply negative 10 years running and currently at negative 7% - see my 2012 article "Negative 10% Real GDP Growth Unmasked" - and this in addition to so many things is unjustly forcing rightful short sellers to lose big). The highly fraudulent scheme of the numerous financial networks all stating a false PE ratio in purposely excluding the many zero to negative earnings corporations of the Russell 2000, misleading investors into thinking they are value buying when in fact they are buying into a much much higher PE ratio ETF than disclosed. Even if such egregious activities are permitted, these massaged figures should be placed as footnotes and in the regular area, the true PE should be posted. I contend there shouldn't even be a massaged figure presented as people "investing" in the Russell 2000 are not buying into only those corporations having positive earnings, they have to buy into the congregate of 2000 corporations.
The Federal Reserve may be playing a huge role in pumping up the small caps disproportionately to the rest of the market. It appears the Federal Reserve first pumps up the small cap stocks using the Russell 2000 to juice up the market as it would take less money to accomplish this, especially in the futures market, and then once getting traction, additional money is poured into both the NASDAQ and DOW. I've seen the disparate market movements in the futures market and regular trading session to arrive at this conclusion. THERE SHOULD BE GOVERNMENTAL OVERSIGHT PREVENTING THIS ADDITIONAL MANIPULATION BEYOND THE UNLAWFUL UPWARD MANIPULATION PUSHING UP THE STOCK MARKET IN GENERAL. Many diligent investors are unduly getting affected.
**
At least some sources show a non-massaged number for the PE ratio of the Russell 2000 as seen at WSJ: Russell 2000 PE Ratio for the date March 2, 2018:
P/E RATIO 3/2/2018
Russell 2000 130.52
Nasdaq 100 26.31
S&P 500 25.23
However, look just about anywhere and you'll see reflective, a PE ratio that is misleading, one that is in the 20's.
Despite the usual stock pumping stories shown on the site, seekingalpha.com, where I use to submit articles but never could get paid for the fact that most people want to hear rosy stock pumping stories and not those speaking of the facts of an overpriced stock market, this one article gives evidence of the Russell 2000 being outrageously overpriced, with a PE ratio exceeding the tops of the prior two bubble markets: Russell 2000 Bubble. Note this article was written on or about Sep 29, 2017 and we know the market is much higher now than then which points to even more disturbingly high PE ratio, likely fueled by the vast number of market quoting sites showing a low PE ratio. Even noting Birinyi Associates being mentioned in this article as giving the forward PE estimate of about 20 for the Russell 2000. It's lots of foul smelling numbers being bandied about to try to draw even more people in to feed the extreme bubble of the Russell 2000.
Gratified David Stockman concurs with me as any DILIGENT person would know yet many are misled from financial companies pushing fraudulent numbers. In the following youtube video of Feb 7, 2018, David Stockman mentions the 150 PE ratio for the Russell 2000:
David Stockman, Trump Economy In The Midst Of phony, Fantastic, Stock Market Bubble
Surprisingly, Marketwatch has an article showing how overpriced small caps are. The date of this article is August 18, 2017, back when the PE ratio was HALF of what it is in March 2018. Gives you an idea how fanatically high the PE is and how it increased so much in such a short period of time:
Here's the Shocking Truth about the Russell 2000 PE Ratio 2017-08-18
NOTE! THIS IS NOT LIKE A FEW CORPORATIONS IN NASDAQ HAVING A PE RATIO AROUND 100, THIS IS AN ENTIRE INDEX OF 2000 STOCKS, NONE OF WHICH ARE LIKE AMAZON.COM, AVERAGING A PE OVER 100!! This is beyond ludicrous and thus government should step in to put a stop to the Federal Reserve and the many financial web sites assisting in getting people to buy into the Russell 2000 with the fraudulent posting of a PE ratio in the 20's. Diligent investors short selling the lunacy should not be forced to keep losing on account of the various modes of manipulation!
Healthy economy without Federal Reserve intervention:
Corrupt economy with society breaking, economy ruining, wealth dividing Federal Reserve anti-stimulus QE:
education
***
Much of our energy in life today is directed at trying to make money passively through financial instruments, really not contributing to society and trying to reap gains indirectly off of others. But when your intentions are, as are mine, to simply recoup bank interest the Fed took away, I say it's reasonable, even with making most modest gains passively so long as the bulk of one's income is from actual work. Society is falling apart form the greed of piling into the various asset classes and the most direct way to cause the problem is in gobbling up more homes and pushing oppressive rents onto the less advantaged. I pose solutions for much of our ills in society, particularly in relation to money as so much else follows in improvements in other areas of life when there is greater financial prosperity. Elsewhere I demonstrate through good trading techniques, one can even go against the market to gain. I proved it's possible in doubling one's money going against the market in just four months' time as I did in early 2008. I do know how to do it and stopped anyway as I felt it's an unjust way to make money. Mind you I did the demonstration with a small account, nothing big. Based on this, I felt it would take no more than $5-10K to trade up and down the market to simply recoup bank interest. Short selling was far more sensible than going long the still overpriced market in 2009, the time when the Federal Reserve forced bank interest rates all the way down to zero. I demonstrate as well the real GDP growth has been deeply negative 10 years running, but still back in 2009, without having so much data collected, everyone should have realized there were no fundamental fixes in the system to warrant a 35% jump off the low of March 2009 which is when I stepped in, reluctantly. Problem was the Fed kept manipulating up the market and never ceased yet. Their actions are of an anti-stimulus as it fleeces the middle class yet apparently much of the middle class is blind as to what's going on. The record homelessness is evidence of the ill effects of the Fed (in addition to other failed governmental policies).
WEALTH MODERATION and spend as little as you can to survive. When it appears life becomes more stable and when you see less poverty, then you can spend more of your savings. When times get rough, that's when you need to hold tight your money for greater protection. The massive wealth divide as we have here, at or nearing a third world level is crippling both society and the economy. One could opt to make less money if making tons of it and never be able to spend it in 10 or more lifetimes but it's a rarity to see anything like this. There is so much for everyone on this planet, everyone, even for the 7 billion people, and though this planet could really handle far more, just to be on the safe side and for greater freedom of movement, we should stabilize and allow the population to decrease slowly. Of course your famed economists will tell you that a declining population is terrible in that fewer working would be supporting a larger amount on social security, there would be no such issue if the important items I mention at http://proposedsolutions.blogspot.com were implemented. When poor or in the lower middle class, housing expenses presently may be 50-75% of one's social security and if higher, government may kick in more in some way, and there's a good chance when at the high end a person decides to be homeless. Do not ever think the poor are just given money and it hurts society from this alone - when given money and they spend it on rent or food, guess who it eventually helps? Sure some in the middle class get part of it but it normally gravitates to the wealthy and so you see, it's just another way how the wealthy gain - if the economy stinks and the wealthy want more and more money and the economy cannot support it, government steps in to CODDLE the wealthy. So you see, we could have government less involved if big fundamental changes were made: getting housing expenses down and then government wouldn't be having to fork over so much money! I could go on and one about this and related stuff. The fact is our overpaid leaders can't figure out solutions apart from some band-aid fix that never really addresses the underlying problems. The wealthy keep getting coddled through all the government programs, believe me on this. The program of cash for clunkers, and everything else, while it may benefit some in the populace at the expense of those who do not take advantage of the program (as is always the case), car dealers would be the biggest benefactor. How is that for making a better economy? It's more ponzi processes on top of more ponzi processes and some will get left out or KILLED as what is going on with the Fed's ANTI-STIMULUS of unlawfully manipulating up the stock market.
TZA = Russell 2000 3X Bear ETF
ReplyDeleteYes, TZA in theory with the outrageous valuation should be about the best investment around to short sell the Russell 2000.
Delete