04-11-2014, 01:43 PM
But some signs suggest that this pullback — or another one sometime soon — could get much more severe. Why? Three basic reasons:
- Stocks are still very expensive
- Corporate profit margins are at record highs
- The Fed is now tightening
Stock Market Crash - Business Insider
By the way, in case some of your bullish friends have convinced you that Professor Shiller's P/E analysis is flawed, check out the chart below. It's from fund manager John Hussman. It shows six valuation measures in addition to the Shiller P/E that have been highly predictive of future returns over the past century.
Stock Market Crash - Business Insider
Today's profit margins are the highest in history, by a mile. Note that, in every previous instance in which profit margins have reached extreme levels — high and low — they have subsequently reverted to (or beyond) the mean.
Stock Market Crash - Business Insider
Whaley explained the VIX is simply a measure of the volatility in the market, which is largely based on investor fear and uncertainty. However, all of the ETFs currently based on the VIX are correlated to the trading of futures indices, which slowly lose value over time as they are reset daily. Whaley noted that some VIX-based ETFs have lost 99% of their value since their inception, and certainly don't trade along with the VIX as novice investors would expect. That's why he's been working with AccuShares to offer a new ETF, one that is based on the VIX and behaves as investors would expect.
Page 2 - Jim Cramer's 'Mad Money' Recap: Blame China, Greece for the Meltdown - TheStreet