Today, none other than Janet Yellen created yet another imaginary metric to reassure the stock-buying-public that all is well as follows: "price equity ratios and other measures are not outside of historical norms." While she admits "some things may be on the high side," her credibility is entirely blown as a simple glance at the following chart shows that - as opposed to what Yellen says, none other than the ultimate establishment body JPMorgan shows that valuations in "price-earnings ratios" are higher now than at the peak of the bubble in 2007. To conclude, this is why the Fed should not enter the business of "valuing" stocks - it has NO IDEA what it is talking about.
To recap: five years ago, President Obama performed the first open-mouth operation for investors to buy stocks and made up a new valuation metric.
Today, it was Yellen's turn to show her ignorance: fast forward to 1:32:44 in the clip below for the epic "Price-Equity ratio" reference."what you’re now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it"