America Was Overvalued

The DOW index is currently in 6500 point range. According to the news I’ve been watching, this is exactly around where it was in the late 1990’s.

I’m wondering if a big part of this market drop is simply because America was overvalued. I mean, did American companies really almost double in value over a twelve year period?

Now I know that the index isn’t really the gauge of America’s value, but I think you get the picture. The DOW shot up way too fast in too short a period of time.

Is it possible that part of this market correction was simply because of the false value we placed on things for the past twelve years?

And I think America is still worth something. It’s not like Apple, Google, Microsoft, etc., are suddenly worthless because of the market drop.

Hopefully I’m right, but I think the DOW will level off around 5500 - 6000, and we’ll begin to grow at a normal pace.

The P/E has been way over 15 in recent years. Over 20. Fifteen is a pretty “stable” number. If that translates to 6500, then look for 6500. The problem is that the market is affected by a lot of other factors - at 6500, there will be a lot, and I mean a lot, of cash sitting in shoeboxes. There will be another runup. Especially if Europe and Asia lags the US in recovery. Which it might - especially Europe.

Two thing have been happening: Two much money was chasing too little value, and the government was fueling profits with lots of liquidity while borrowing to suport its behavior instead of taxing… Take housing for example: The people who build the houses, and in general create all value did not have money to buy back their product… This made money a commodity…At the same time, property, which once paid all the support of government was not taxed as it should have been so it became a bank of wealth, and was held for speculation…The supply was controlled and the price driven up, where taxes would have forced it onto the market or forced it to make money… And because wages supporting government and taken for profits, little was left in the hands of working people to buy property, so again, money became a commodity that drove up the total price of a house to three times its base price… So yes, there was a bubble, and correct tax policy could have controlled the situation for the good of the whole country… Fat chance of that happening…