Put Scott Wren, senior equity strategist at Wells Fargo Advisors, in the camp that’s getting tired of hearing about a stock market bubble.
“Open up a newspaper, jump online, or turn on the TV for some financial news and you will hear it used over and over,” he says in a note. “All day long it seems. Every day. The U.S. stock market is in a bubble. The Federal Reserve is creating another ‘asset bubble in stocks.’”
Wren acknowledges that the Fed’s ultra-loose monetary policy has given a lift to stocks. But while the appetite for “cheap credit and speculative profits” has led to asset bubbles in the past, the current crop of bubble alarmists are forgetting some things, he says.
While one could rationally argue that some segments of the stock and fixed-income markets are showing signs of being in a bubble, “there are frequently several industry groups or pockets within the overall stock market” that show signs of froth, he says.
Moreover, the S&P 500 is trading at 16.7 times what is likely to be a conservative earnings estimate for this year, which happens to be the median price-to-earnings ratio going back to 1986. He writes:
Keep in mind that earnings started to hit record highs way back in 2011, but the stock market initially was slow to follow as uncertainty over the global economy reigned supreme. Now, equities have caught up with earnings. Based on our outlook, this cyclical bull market has more room to run. … The bottom line is that the S&P 500 has indeed had a fantastic run over the last five years, but current levels do not reflect a bubble.
Mr. Wren's guessing, like everybody else. Stop trying to convince everyone that everything is great in the market by quoting professional guessers. Even if everything is great, it doesn't mean that Intel stock is going to increase further any time soon. We're going to have to wait for the next earnings report to see. Right now, we're in a holding pattern. The big boyz want to see further earnings growth before they take the stock price higher. And even if hey do take it higher, it's only going to be by a couple of bucks max. This is going to be a slow process in my opinion. Intel is just to big of a company to move the needle quickly.