Economist: S&P 40 Percent Overvalued

The U.S. Standard & Poor 500 Index is approximately 40 percent overvalued and doomed to declines as a result of central banks avoiding securities investments and selling shares that previously increased prices and raised capital, Bloomberg reports. “Central banks, they’ve got to stop some time and if that happens everything will come down,” economist Andrew Smithers said. Smithers has been here before. In March 2000, he and economist Stephen Wright predicted the overvaluation of U.S. equities, the same month the S&P reached a record high and then proceeded to dramatically drop 49 percent over the next 2 1/2 years.