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I find it very interesting that the ONE THING no one ever seems to talk about is the fact that everyone is chasing yields.
Prime Iowa Farmland was going for $10,000+ an acre because it returns $300 an acre annually, a .03% return which was better than many other investments. Other investments have been improving returns, so farmland has been dropping. Many people didn’t factor in the management hassle of farmland either I’m sure. I’m sitting it out until the price drops to a reasonable level.
This is just one example among many. I was checking out the P/E of the stock market and it’s a fairly similar story- precisely the reason why the DJIA is so high right now. Now some companies such as CAT are seriously overbought, but the fundamentals of many companies are solid enough to warrant the investment and thus the rise in the DJIA.
Only thing that matters out there folks is the “interest rate” and the “return”.
Stocks p/e are often fake through accounting tricks look for “free cash flow” that is real metric for business health.