This chart shows the market reaction to Janet Yellen's remarks this morning in a speech she gave. The Dow is up 100 points and still climbing. We are once again near the all-time record high levels that we reached last year, despite that corporate earnings have declined since then. That means that price to earnings ratios are now even more stratospheric and bubbly than they were then, because at the same high price levels but with lower earnings, the extremity of the ratio is even higher.
Should any one person have that kind of power to manipulate the market? It doesn't change the magnitude of risk to investors. It only changes the perception of risk, and the willingness to take greater and greater risk. When investors are once again forced to acknowledge that risk, the consequences will be calamitous!
