Stock market price-to-earnings ratios, on the other hand, have been persistently well past their textbook warning thresholds but there seems no evidence that investors believe the stock market to be overvalued. Whether this is a Minsky moment waiting to happen is certainly an important thought but the absence of clear-cut valuationmeasures for the market as a whole leaves the issue without an empirical resolution
From the FSCC’s Financial Stability Report 2017 (p. 47) [bold mine]
Wow, a Minsky Moment waiting to happen!
That is just awesome!
Though they have been inclined to see a Minsky dynamic, they cite the lack of empirical evidence on it for them to whistle past the graveyard. Empirics is about the past.
On the other hand in a footnote they write,
Herd behavior manifests when people follow the actions or decisions of others instead of using their own information or making independent decisions. An example of which is the herd behavior of investors that lead to the stock market bubbles (Banerjoe, 1992). (p.14)
One cannot statistically measure “herd behavior” with an “empirical resolution”
For unspecified reasons, the FSCC steered from a direct slam on the stock market.
Let me help the FSCC.
The stock market has been under their supervision
But the irony is that though this stares at them at their faces, they don’t seem to see the deliberate deformation and impairment of the demand and supply schedules of titles to capital via the brazen price fixing process.
The enormous pumps at the closing bell had been camouflaged by the substantial declines on September 5 and 6
Though the PhiSYx plunged 3.27%, the combined weekly effort to rescue the headline index totaled a staggering 176.39 points or 2.24% from the close of the previous week
Since this means that prices of the heavyweights had been forced up, these imply why the “textbook warning” on the violations of valuation thresholds occurred.
By the way, in what other country do you see the stock market end with 'tails'?
And since the era of easy money played a significant role in it, its twilight will trigger the Minsky Moment.
The escalation of the repricing, refinancing and repayment risks (3Rs) involves many of these companies that aggressively used leveraging to embellish profits.
Or, after all, many of the listed firms, mostly in the PSEi 30 index, have been embroiled in the frenetic race to acquire debt to finance the stampede to build supplies.
What goes up will come down.
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