Are Stocks Too Expensive Now?
Although U.S. and global economies continue to be scarred by the credit crunch that began in 2008, stocks already discount the risks.
By Seth Masters
Investors today have good reason to worry about stocks. Europe, the U.S. and emerging markets are facing real problems today and economic recoveries after financial crises almost always take longer than recoveries after ordinary downturns. The global economy may take several more years to fully recover from the credit crunch, and so may the stock market. Both could weaken again before getting better.
Indeed, our research has found that after 15 systemic banking crises around the world, the stock market took nine years on average to regain its prior peak. We dont know if the recovery from the recent crisis will take a longer or shorter time than average, but assuming it is average, were now about halfway through. ....