by David Kranzler
Investment Research Dynamics
The coronavirus crisis is perhaps the real “Black Swan” that no one saw coming. While the virus pulled the trigger on the loaded weapon aimed at the stock market, it’s not the cause of the fastest 10% decline in the history of stock market. Using “as adjusted” GAAP accounting applied to the current trailing 12-month SPX earnings to make them comparable to the GAAP standards applied to 1999 earnings, this was the most overvalued stock market in U.S. history. While Fed officials and Wall Street story-tellers rejected the notion that the stock market was in a bubble, this table from Crescat Capital demonstrates the stock market’s extreme degree of overvaluation: