Clarium Capital doesn’t think so. According to a recent note, Clarium says the stock market is likely severely overvalued considering the average negative liquidity trough PE of 11.1. That implies the stock market should be at roughly 640. Even more disturbing, Clarium stresses that a deflationary negative liquidity environment, such as the one we are in, is much more dangerous than your average negative liquidity environment and tends to overshoot to the downside in terms of PE. That would imply a stock market value of 370. Yesterday’s close: 857. Yikes….
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.