I’m seeing a lot of market pessimism on this sub lately. 99% of the reasoning that comes with this pessimism usually has to do with Trump. Well, guess what, after every presidential election about 49% of the country disagrees with the outcome, this isn’t a new thing. The market may make short term jumps up or down based on politics, but the real bread and butter of the markets is the economy, and I believe that right now the economy is stronger than ever, thus supporting the ever continuously rising markets.
First, the S&P P/E ratio. This ratio takes the price of the S&P and divides it by the collective earnings of the stocks within the S&P. It works as an overbought/oversold indicator much like it does on individual stocks. Currently it’s ~25, which is maybe “slightly” high but it is nothing close to estimating that recession is coming. The link below will show you S&P 500 P/E ratio by month, look at the ratio during late 2008 and 2009 (It was in the 100’s)
Next, unemployment. April 2017 reported unemployment of 4.4% which is tied for the lowest percentage since 2007.
Finally GDP, the graph below will show you that it continues to grow.
submitted by /u/pgneal3
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May 27, 2017 at 11:16PM
from /u/pgneal3
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