Wall Street can’t say it hasn’t been warned.
The Office of Financial Research, the agency tasked with promoting financial stability and keeping an eye on markets released a paper last week, stating that the stock market is dangerously overpriced while excessive leverage will exacerbate the next market correction.
The paper is aptly titled “Quicksilver Markets” alluding that when prices deflate it will happen swiftly and not without pain.
“The timing of market shocks is difficult, if not impossible, to identify in advance, let alone quantify — a shock, by definition, is unexpected,” wrote Ted Berg, an analyst at OFR.
But Berg identified several indicators that are pointing to a correction. Instead of looking at valuation in isolation, Berg and his team analyzed other factors, such as corporate profits and leverage, and found a disturbing picture.
http://www.marketwatch.com/story/stocks-are-overpriced-overleveraged-headed-for-trouble-2015-03-25?siteid=yhoof2
The Office of Financial Research, the agency tasked with promoting financial stability and keeping an eye on markets released a paper last week, stating that the stock market is dangerously overpriced while excessive leverage will exacerbate the next market correction.
The paper is aptly titled “Quicksilver Markets” alluding that when prices deflate it will happen swiftly and not without pain.
“The timing of market shocks is difficult, if not impossible, to identify in advance, let alone quantify — a shock, by definition, is unexpected,” wrote Ted Berg, an analyst at OFR.
But Berg identified several indicators that are pointing to a correction. Instead of looking at valuation in isolation, Berg and his team analyzed other factors, such as corporate profits and leverage, and found a disturbing picture.
http://www.marketwatch.com/story/stocks-are-overpriced-overleveraged-headed-for-trouble-2015-03-25?siteid=yhoof2
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