Daily Price Movement / General Discussion, page-24296

I think the question Zip investors have to ask themselves is will Zip survive a general market downtrend given that it has not continued to make impulsive upside moves while supported by a generally rising market.

The S&P 500’s CAPE ratio which measures inflation-adjusted earnings over the past 10 years has reached its highest level since the 2000s tech bubble and has recently surpassed the peaks seen just before the 1929 market crash.

The valuation gauge also is more than double its historical mean of 16.72

This chart posted previously shows we are at the top of the inflation adjusted channel for the S and P 500.

The Schiller ratio now standing at 38

The Schiller ratio cannot be read in isolation as it's composition is affected by interest rates and they have never been lower in real terms so Schiller can still move higher even though valuations are fully extended.

However if interest rates start to increase stock returns are likely to be significantly negative over the next eight years.

I would expect NZ may be the first to start hiking rates.

Another red flag is Margin Debt which is at extreme levels and higher that it's ever been, has been increasing on a monthly basis allowing people to buy stocks with money they don't have.

Previous crashes have been preceeded by a reduction in margin debt a few months prior to the crash.

Margin debt started to decline for the first time in a long time in July 2021