Stock Market
Stock Market
18/Aug/2011
People talk about the peak of the market and how prices now are low or good value in comparison, but the peak can only be pin-pointed long after it has been passed and each peak is a consequence of how things were before the market reached that stage.
As to whether prices now are low surely depends upon whether the higher prices could return. There is no reason to think they won't, conversely none to think they have to. Interesting whenever the FTSE gets to 6,000 or more it takes a tumble; suggesting that anything much above is pushing it beyond its comfort zone. In July 2007, FTSE was about 6700, by March 2009 it was about 3500.
It is also likely that where prices are now could be considered a peak in their own right. I am looking forward to the FTSE dropping to around 4500 possibly lower later this year. The current yield of about 3% is not, imo, pricing in enough risk: there is no reason why yield should not be around 5% or so.