'A bit of a bubble' in stocks: Berkshire director

[VersaillesinNY]

Meryl Witmer, Eagle Capital Partners, reveals what she's learned from Wall Street legends.

http://www.cnbc.com/id/101046912?utm_source=twitterfeed&utm_medium=twitter

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"The greatest enemies of knowledge is not ignorance; it is the illusion of knowledge"
Stephen Hawking

[VAL9000]

I think more specifically the bubble is forming in ETF's - basically the S&P 500 index.  It's still early, but I noticed over the past couple of years everybody who I talk to about personal finance says "you should definitely be in ETFs" for a number of reasons.  Generally I agree with the reasons, but whenever everybody says the same thing ("gotta be in tech", "gotta be in real estate", "gotta be in tulips"), it doesn't end well.  I think it's time to start paying attention.

Anyone know where to get valuation metrics on S&P 500 vs. non S&P 500 in aggregate?  I'd be interested in the relative ratios like P/E, P/B, etc.

[JBird]

Google.com

[VAL9000]

Google.com

Thanks so helpful.

[JBird]

I don't mean to be rude; merely typing in "S&P 500 earnings history" gives you all your answers.

[Myth465]

I am considering selling. I am starting to feel smart which tells me its time to raise cash.

[Hielko]

I don't mean to be rude; merely typing in "S&P 500 earnings history" gives you all your answers.

The question was how expensive the S&P500 is relative to the US stocks that are outside the index. That's not that easy... Could be interesting, but I doubt that ETF's have a huge impact because there are plenty of stocks outside the S&P500 that are also in some ETF. That said, with more money going to ETF's it almost must be that markets get less efficient.

[sigis]

I had exactly the same thought - ETF popularity should be overall good for value investors and stock pickers in general

[twacowfca]

I don't mean to be rude; merely typing in "S&P 500 earnings history" gives you all your answers.

The question was how expensive the S&P500 is relative to the US stocks that are outside the index. That's not that easy... Could be interesting, but I doubt that ETF's have a huge impact because there are plenty of stocks outside the S&P500 that are also in some ETF. That said, with more money going to ETF's it almost must be that markets get less efficient.

It's a form of kurtosis.  Markets driven by ETFs should tend to make little distinction among good and poor prospects for many companies while becoming enamored of a few stocks that reach bubble valuations. (hyper normal for most stocks as the market rises, but near the peak a fat tail for the few favored industries and stocks.)  Then, when the bubble pops, a fat tail on the downside with huge sell offs for over priced or low quality/value stocks.

[Packer16]

I think you saw this in the tech bust where value managers of most stripes were able to outperform the S&P 500 for 3 years.

Packer