Wednesday, June 1, 2011

FRB's Janet Yellen Basically Says We Should Short the Russell 2000

H/T to ZH, from a Janet Yellen speech today:

forward price-to-earnings ratios in the stock market fall within the ranges prevailing in recent decades, and are well below the early-2000 peak, although corresponding measures for small-cap equities (not shown) appear somewhat elevated
Wow! Remember, earlier Bernanke bragged about how much he had pumped up equities with "QE2". Now the Fed concedes that the pumping-up led to overvaluation?

Am I meant to conclude that I should sell equities?! And buy Treasury bonds?

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