Henry Blodget, an ex-Merrill Lynch analyst, said that US stocks have jumped 65% from their March lows. However, the movement of stocks over the next week, next year or next five to ten years cannot be predicted by the way stocks are overvalued today, Blodget said. Blodget reminded investors that stocks were overvalued for the better part of 20 years before the market crashed in 2007.
Blodget mentioned that the market's valuation suggested that stocks are priced to fall a little less than average over the next decade. The valuation also indicated that stocks may be trading at a price significantly more than the fair value, considering the structural issues that continue to drag down the economy, Blodget added. Blodget believes that the economic recovery has to be rather sharp to get the stocks soaring from their current levels.
If you agree with BusinessInsider's Henry Blodget, then you should consider shorting the SPDR S&P 500 (ETF) (NYSE: SPY).
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