Over the past year and a half, there is no doubt that some investment banks, research firms, money managers and other bears alike have been waving the red flag as to the inevitable crash of the global economy, predicting not only lower than average future returns but impending doom. Their claims come from the usual data points: S&P 500 profits are down, S&P 500 P/E ratio at decade highs, a slowing Chinese economy, a weak transportation index, the steadiness of housing starts, US GDP barely growing at inflation, the end of the commodity super cycle, and, of course, the usual cop out of “these strong returns realized by the market over the last 2 years are not sustainable because they are propped up by a Fed bubble”. Oh, and let’s not forget “watch what the bond markets are telling us”, the usual cliché posed by some managers and analysts as if they are the next boy who cried wolf predicting the come of the ‘Great Recession, Part 2’.
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