U.S. stocks rose to another record last week, and in the process reached their most overbought level in more than two decades, according to the relative-strength index. The technical indicator of market momentum signals an increased potential for a pullback when it rises above 70. The S&P 500 closed Friday with an RSI level just below 82.

(http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34890500)

You have this layering upon layering of leverage and overpriced shit which makes me really wonder about what the next crash or bust is going to look like.

What concerns me the most is that you have a huge population of people who are "doing what they are told" and taking the "low risk" route by buying indexes and mutual funds - but in this scenario the Indexes and Mutual Funds that have been billed as being balance and safe are anything but - they have been distorted and perverted.

(http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891721)

until the money supply shrinks, which is going to take a while, there is no real catalyst for things to crash

(http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891744)

Like you said, the demand for store of value assets has exploded since 08 - but that has nothing to do with rational investing and economic behavior. When you invest, you purchase something that can PRODUCE capital. When you trade, you are relying on the Greater Fool Theory due to no inherent intrinsic value (Gold, Art, Bitcoin, Oil)

What I think might happen is that there are going to be some insane liquidity crunches if it ever stops being like it is currently and the question is - whats the catalyst? Buffett himself has said that it will be a VERY interesting day when the interest rates rise significantly.

I personally thing that the catalyst will be continually rising interest rates, which will force the mark down in price of capital producing assets (shares of companies, real estate, farmland, etc) due to a higher risk free interest rate.

At a 3% interest rate on the 10 year however, I think that a P/E of 35 (i.e earnings yield of 2.8%) on the broader market is simply not sustainable from a rational economic perspective.

(http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891837)

One way for PE to drop is for earnings to rise. The price just doesn't have to drop.

(http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891770)

When you have a P/E of 25 on the SP 500 - thats an earnings yield of 4% (i.e 1/25) - then compare that to the 10 year bond yield - lets say its 2.25% - that spread is the net benefit you get from owning equity securities vs government bonds. Currently the spread is probably around 1.75% - what happens when Interest rates on the 10 year get to 3%? That spread narrows to 100 basis points. What happens when interest rates continue to go up?

What I am saying is that from a rational economic perspective there is a theoretical maximum in stock market value when you measure it against the 10 year - which is around a P/E of 30-35. A P/E of 35 on the broader market is an earnings yield of 2.8%...

(http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891757)

instead, people pour money into anything and everything else

when interest rates go up, some of that money will go back to bonds, which means prices of everything else should go down

(http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891803)

Think ddm/ wacc terms. Growth is an important variable too.

(http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34892932)