http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high Are Stock Prices too High? Has the continuing stock market rally in the aftermath of the 2008 crash run its course? US Federal Reserve Chairman Yellen says that stock valuations are quite high according to Bloomberg Business. Federal Reserve Chair Janet Yellen, surveying the financial landscape for signs of bubbles after more than six years of near-zero rates, warned that both stocks and bonds are richly valued. “I would highlight that equity-market valuations at this point generally are quite high,” Yellen said in Washington on Wednesday in response to a question at a forum on finance. “Now, they’re not so high when you compare the returns on equities to the returns on safe assets like bonds, which are also very low, but there are potential dangers there.” Yellen said bond yields “could see a sharp jump” when the Fed raises its benchmark interest rate. Most Fed officials predict that will happen this year for the first time since 2006. Are stock prices too high? If that is the case investors will be well advised to take a little off the table and hold cash until the market corrects. Warren Buffett says that it all has to do with interest rates. Interest Rates and the Dollar As quoted in The Guardian, Berkshire Hathaway CEO Warren Buffett says that if low interest rates persist today’s stock prices will seem low over the long term. And if interest rates increase stocks will suffer. Warren Buffett has warned that stock prices will appear expensive if interest rates increase from their current ultra-low levels. “If we get back to normal interest rates, stocks at these prices will look high,” said the billionaire investor, speaking at the annual shareholders’ meeting of his conglomerate Berkshire Hathaway. Buffett, one of the world’s most famous investors, is widely followed for his advice on finance and life. With Wall Street and many European stock markets around all-time highs, his views on the US and global economy will be watched closely. Are stock prices too high? They are if interest rates are going to rise. That all depends on the US Federal Reserve. The Fed The Washington Post weighs in with the opinion that job growth could cause the Fed to raise rates sooner than later. Friday, the Labor Department is expected to report the economy added 220,000 jobs in April and push the Federal Reserve toward raising interest rates. Meanwhile measures of core inflation-consumer prices net of volatile energy and food prices-have firmed in recent months and are approaching the Fed target of 2 percent a year. And history has taught economists that once inflation accelerates, it is very difficult to contain, strengthening the hand of hawks among Fed policymakers. Still raising interest rates-likely not in June but perhaps by September-to moderate inflation entails great risks.

1. B y w w w . P r o f i t a b l e I n v e s t i n g T i p s . c o m
Are Stock Prices too High?

2. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Has the continuing stock market rally
in the aftermath of the 2008 crash run
its course?

3. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
US Federal Reserve Chairman Yellen
says that stock valuations are
quite high according to Bloomberg
Business.

4. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
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5. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Federal Reserve Chair Janet Yellen,
surveying the financial landscape for
signs of bubbles after more than six
years of near-zero rates, warned that
both stocks and bonds are richly
valued.

6. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
“I would highlight that equity-market
valuations at this point generally are
quite high,” Yellen said in Washington
on Wednesday in response to a
question at a forum on finance.

7. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
“Now, they’re not so high when you
compare the returns on equities to the
returns on safe assets like bonds,
which are also very low, but there are
potential dangers there.”

8. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Yellen said bond yields “could see a
sharp jump” when the Fed raises its
benchmark interest rate.

9. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Most Fed officials predict that will
happen this year for the first time
since 2006.

10. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Are stock prices too high? If that is the
case investors will be well advised to
take a little off the table and hold cash
until the market corrects.

11. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Warren Buffett says that it all has to
do with interest rates.

12. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Interest Rates and the
Dollar

13. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
As quoted in The Guardian, Berkshire
Hathaway CEO Warren Buffett says
that if low interest rates persist today’s
stock prices will seem low over the
long term.

14. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
And if interest rates
increase stocks will suffer.

15. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Warren Buffett has warned that stock
prices will appear expensive if
interest rates increase from their
current ultra-low levels.

16. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
“If we get back to normal interest
rates, stocks at these prices will look
high,” said the billionaire investor,
speaking at the annual shareholders’
meeting of his conglomerate
Berkshire Hathaway.

17. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Buffett, one of the world’s most
famous investors, is widely followed
for his advice on finance and life.

18. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
With Wall Street and many European
stock markets around all-time highs,
his views on the US and global
economy will be watched closely.

19. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Are stock prices too high? They are if
interest rates are going to rise.

20. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
That all depends on the US Federal
Reserve.

21. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
The Fed

22. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
The Washington Post weighs in with
the opinion that job growth could
cause the Fed to raise rates sooner
than later.

23. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Friday, the Labor Department is
expected to report the economy added
220,000 jobs in April and push the
Federal Reserve toward raising
interest rates.

24. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Meanwhile measures of core
inflation-consumer prices net of
volatile energy and food prices-have
firmed in recent months and are
approaching the Fed target of 2
percent a year.

25. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
And history has taught economists
that once inflation accelerates, it is
very difficult to contain,
strengthening the hand of hawks
among Fed policymakers.

26. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Still raising interest rates-likely not in
June but perhaps by September-to
moderate inflation entails great risks.

27. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
The appreciation of the dollar has
taken a big bite out of U.S. growth

28. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
And increasing U.S. interest rates-
when central banks in Europe, Japan
and China have sharply eased
monetary policy-risks pushing the
dollar up even further and end the
U.S. economic recovery altogether.

29. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
If the Fed raises interest rates and the
worst case scenario occurs the stock
market rally will be a thing of the past
and the US economy will suffer.

30. http://profitableinvestingtips.com/stock-investing/are-stock-prices-too-high
Are stock prices too high? They
probably are.