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Monday, January 28, 2019

UBS CEO Sergio Ermotti Basically Admits Equities Are A Ponzi Scheme

By: Wes Messamore

Photo: By UBS Group

Speaking at a CNBC panel at the World Economic Forum in Davos, Sergio Ermotti, the chief executive officer of Swiss bank UBS said the massive December sell-off was the result of political fears as well as the reality setting in that the Fed is tightening up the money spigots.

December losses on the S&P 500, Dow Jones, and NASDAQ made 2018 the worst year for equities since the devastating financial crisis of 2008, the worst December of trading on the U.S. stock market since 2008 as well, and even the worst December since the Great Depression.

U.S. Stocks Were Massively Overvalued

The signs that U.S. stocks were overvalued going into December 2018 were there before there was blood in the streets. A year ago the price-to-earnings (P/E) ratio for the S&P 500 was above 25.5, whereas the average historical P/E ratio for the S&P 500 over the past 146 years is 15.6.

In October of last year an analyst at Market Watch pointed out:

"There are only two other times in history that stocks were more expensive than they are today: just before the Great Depression hit and in the 1999 run-up to the dotcom bubble burst."

Read more at CCN.