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Explaining market prices -- the new solution

You know a market is overheated when traders/brokers are looking for new metrics to justify the stratospheric prices of stocks, in the '00 it was "clicks" remember those -- its like saying "we lose money on every sale, but will make it up on volume!"  Anyway, some brokers that I can of respect have decided that the standard p/e is no longer a good measure (considering we are at historical highs -- or very near there) and where companies profitability is also a historical high levels -- these things have a way of returning to the mean!

However, if your job is to sell the market, then you find GAAP adjusted models, or using future statements as good metrics.  There are a number of ways to show that the market is not yet fully valued.

However, as a prudential investor the rule has to hold -- if it looks expensive it probably is expensive; better to leave some money on the table than being steamrolled out of the market.


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