Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Have Stocks Moved Too Far, Too Fast?

As the economy dawdles, many are left wondering whether stocks are getting ahead of themselves. The Dow Jones (DJINDICES: ^DJI  ) is up 14% in the last year, even after Monday's plunge. The index has risen on more than 60% of trading days this year, well ahead of long-term norms. And, of course, we've been here before. The S&P 500 (SNPINDEX: ^GSPC  ) trades near where it did in 2000 and 2007 -- before respective crashes.

Have we come too far, too fast? Is the market overvalued? No one knows, but everyone has an opinion.

Last week I asked Charles Schwab chief investment strategist Liz Ann Sonders. Here's what she had to say (transcript follows):

Sonders: I don't think we've come too far too fast, nor do I think that there aren't economic fundamental justification for what the market has done. If you look at the last two times we've been at these levels, back in October of 2007 and then back in 2000, about March of 2000, and you compare most typical market metrics -- you look at earnings; you look at valuation on those earnings; you look at cash flow; valuation on the cash flow; sales; a lot of technical measures; percentage of stocks trading above their moving averages; a lot of sentiment measures -- in virtually every case, we look better, certainly better than we did in 2000 because we had, in hindsight, a hugely overvalued market, but quite a bit better than we did in 2007. So I think, just looking at the basic, typical market metrics, I think the market looks pretty good here.

More from the Motley Fool
Our chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2365668, ~/Articles/ArticleHandler.aspx, 10/1/2016 1:26:26 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 16 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 5:01 PM
^DJI $18308.15 Up +164.70 +0.91%
^GSPC $2168.27 Up +17.14 +0.80%
S&P 500 INDEX CAPS Rating: No stars