Former Federal Reserve Chairman Alan Greenspan said the stock market has room to rise from record levels.

“In a sense, we are actually at relatively low stock prices,” Greenspan, who guided the central bank for more than 18 years, said in an interview with Sara Eisen on Bloomberg Television today. “So-called equity premiums are still at a very high level, and that means that the momentum of the market is still ultimately up.”

Greenspan said the stock market is “just barely above 2007” and the average annual increase in stock prices “throughout the postwar period” is 7 percent, which leaves room for a rise.

“Price-earnings ratios are not hugely up,” he said. The market has “gone up a huge amount, but it’s not bubbly,” according to Greenspan.

Ed Note: Mike Shedlock has put together a thorough analysis of Alan Greenspans forcasting record. Here is a short summary:

Succinct Historical Synopsis

• In 1973 Greenspan said “There is no reason to be anything but bullish now” – The market topped that month, then crashed
• In 1996 Greenspan warned of “Irrational exuberance” – The market, fueled by Greenspan’s incompetent actions roared for four years
• In 1999 Greenspan was extremely worried about Y2K – The programming rollout on January 1, 2000 was exceptionally smooth
• In 2000 Greenspan fully embraced the internet productivity miracle – The dotcom bust soon began
• In 2001 Fed minutes show Greenspan was worried about inflation – A month later the Fed was fighting deflation
• In 2006 Greenspan said “Housing Prices Won’t Fall Nationally” – Prices peaked summer of 2005, then crashed over the next seven years

Today Greenspan Says 

• “In a sense, we are actually at relatively low stock prices”
• “The momentum of the market is still ultimately up.”
• “The market has gone up a huge amount, but it’s not bubbly.”

The full analysis can be read HERE