With stock valuations high and the market chatter nervously fixated on the great tapering debate, the bears claimed victory today with the S&P off 1.6% and the Dow down 170 points.
The impact of Central Bank liquidity has undeniably resulted in lofty stock valuations given the economic backdrop, as the graph of the historical Shiller PE ratio below illustrates.
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September is commonly viewed as the month when investors and traders, upon their return from sunning themselves, get nervous about year end results (read bonuses) and start to take money off the table. The statistics back this up as the graphs below on historical S&P 500 monthly returns illustrates.
Click to enlarge
So, today looks to me like the possible opening salvo for a September bear party. I wouldn’t get too worried though, despite the musings from Jackson Hole there is always a Central Bank around to scare the naughty bears away if they overstay their welcome.
This blog represents my personal views and is not reflective of the views or opinions held by any company or employer I work for currently or have worked for in the past. The views expressed herein are based solely upon publicly available data. No views expressed herein should be taken as an endorsement to take any particular course of action in the markets. The basis of this blog is that different views should be expressed and readers make up their own minds on the what they believe and act accordingly.
deconstructingrisk 
Yep. Not a good time to buy the market in size.
On a completly unrelated note, do you have an RSS feed ? I like your site and drop by once in a while but just going through my RSS feeds is more convenient :-).
Rgds,
Eddie
Thanks Eddie, appreciate the comment. Was beginning to wonder if anybody was out there!!
I put a RSS link on sidebar of the site, let me know if that’s not what you meant, I’m not too up to speed the RSS.
Thanks again.
Mozoz
Mozoz, works as designed ! This is precisely what I was looking for.
I stumbled across your blog when I googled for some insurance related stuff. There is not much out there and I am not even talking about quality here…
Cheers,
Eddie