Jobless claims increased last week by 13,000 to a seasonally adjusted 336,000, but this doesn’t alter the fact that new filings for unemployment benefits have been trending lower in recent months in a convincing manner. This leading index has been telling us that the labor market will probably continue to expand at a moderate pace, which in turn implies that the economy will grow. Nothing in today’s report suggests otherwise, even if some perma-bears will jump on today’s data to argue that a darker future awaits in the near term.
Daily Archives: August 22, 2013
Looking Into The Future With A Rear-View Mirror
How do you know if the stock market (or any asset class) is overvalued and ripe for a fall? Wait a year or two and you’ll have a definitive answer. Real-time decisions, alas, are slightly more complicated. Yes, there are several techniques that you can apply for estimating expected return, but you might start with one metric that easy to compute and always up to date: trailing return. It’s hardly perfect and it’s burdened with all the usual caveats. But it’s a great starting point for developing some context for thinking about what’s overpriced, what’s not, and how to tell the difference.