Stocks are not cheap. They are at about the top end of the normal trading band of P/Es of 7-14.
Regardless of which stocks your p/e's are based on, S&P earnings and dividends are back to average levels.
Posted on 12/20/2008 10:31:53 AM PST by SeekAndFind
Who also just said stocks are now cheap.
Stocks are not cheap. They are at about the top end of the normal trading band of P/Es of 7-14. For the past decade P/Es of 14 have marked clear bottoms.
This guy is an idiot.
Just like this time.
The collapse and liquidation of malinvestment and reallocation of assets to productive enterprise must happen. The only question for policy makers is how to accelerate that process and minimize the personal pain. Mass unemployment and idle captital goods that are fit for productive was the result of rapid deflation.
The Fed is avoiding deflation as much as possible (printing to replace the trillions of bad credit is a challenge). The reallocation, however, cannot be avoided.
Would you mind sharing the names of your favorites so we might look them up?
Its going to get ugly out there, especially first quarter next year when a lot of over leveraged retailers go under from a bad christmas season. We do have a BIG mess in the economy to clean up.. Trillions upon Trillions of graft, excess, fraud and debt that has to work its way out.
However we are NOT on the verge of topping the Great Depression, UNLESS the government just keeps printing FIAT money and refuses to let those companies that created the mess fail and letting the system clean itself up. If they keep doing this we will wind up in a truly bad depression. We aren’t there yet, though every day we seem to be making moves that may be putting us closer.
What you have is a very big contraction, it was long overdue, and its not minor. However, its not the end of days, but sadly it is happening most in the cities where the national media and their allies live. The places where the excesses were the worst are where the contraction is now hitting the hardest. And these cities just happen to be right where the MSM lives and breaths as far as they in their ivory towers perceive it the world is ending.
The larger issue if we do wind up in a serious depression is that we are now a consumption/service economy. We can’t manufacture our way out of it, that’s scare folks. IF we fall hard, and we haven’t yet, but if the government keeps this crap up and we do fall hard, getting out of it is going to be a very very very long ordeal. We no longer manufacture real things on a scale that carries the economy.
Don’t get me wrong its going to be ugly, but its not the great depression yet, it can get there depending on what the government does, but we aren’t there at the moment.
LOL! Well, one "DOGCE" to another, we both know that hard measurements of related factors matter, and arm-waving is for the birds. What's important in this economy is whether people are working and how well we're being paid, and the hard fact is that jobs are not being lost and incomes are rising.
rb22982 uses 'debt to gdp' ratios and 'mortgage rate resets' to prove that we're bad off. None of us know what the hell those numbers actually mean but they obviously don't matter if delinquency rates are still low and private net-worth is still high.
Stocks are not cheap. They are at about the top end of the normal trading band of P/Es of 7-14.
Regardless of which stocks your p/e's are based on, S&P earnings and dividends are back to average levels.
I just took a 10% pay cut. Arnold ordered a 10% pay cut for all State of California employees. Not that it isn’t required — it is! But I think it is much too soon to say “jobs are not being lost and incomes are rising.” I beg to differ and I see the opposite. Jobs are being lost and incomes are falling. Some economists are forecasting the nation-wide loss of 1,000,000 jobs/month in early 2009.
This time it IS different. Things are very bad.
Is that chart based on trailing earnings, or the much reduced earnings going forward?
Data from the Golden years of Alan Greenspan 1987 onwards are anomolous.
Of course Obama hasn't had an opportunity to install his "economic fixes" yet. Once he does, we may have a depression.
No, permabullshitters like you don't know what they mean. The rest of us do. High debt loads, among other things, means that a lot of folks are being paid to sit around and collect interest from folks who are working.
Furthermore, a lot of that debt was accumulated [wasted] building non unproductive assets - like casinos and Miami condos. An amusing case is Continental energy being bought out by EDF. While the US fiancial industry has leveraged us to the hilt speculating on nonsense, we are reliant upon the French to invest in productive assets. Goddamnit - the average Frenchman now has more business savvy than 98.35% of Americans.
I think you are pretty much on the mark. We have the assets from 30 years of malinvestment to liquidate at their true worth (pennies on the dollar at most) to turn over to productive enterprises. The danger of freezing up productive enterprises because of the enormous deflationary pressures can be somewhat offset through increasing liquidity through expanding the amount of money in the system (this is very basic Friemannian monetarism). The real problem is that printing money and giving it to banks only serves to expand credit/debt, not increase liquidity in the real economy.
One of the problems is that the US economy has got banking and productive enterprise backwards. We had strong banks because we had a productive economy, and not vice versa.
Nonsense!
Once Obama confiscates and reinvests our 401(k) money in government projects, the economy will skyrocket.
Utopia, is just around the corner.
Reminds me of when I was trying to get a chief of a structures branch to tell me what load size beams he was putting in --all I could get was 'aw, strong --real strong!
There's actual measurements for stuff like incomes and jobs, and the BLS has lots of headcounts on how many jobs there are just like the BEA lists how disposable incomes have been going. The unemployment rate's been going up because the workforce has grown, not because of job losses, and the good news is family incomes are still growing.
Anti-numbers types reject all government stats, but geeks like us know how to evaluate data because we do it for a living and we make our judgments on facts, not feelings. The doom'n'gloom press is doing a terrible disservice by making people forget that 30 years ago we had a decade where household incomes fell even when more family members went to work.
Compared to the '70's, we got it easy.
The p/e's are "S&P 500: Price Earnings Ratio - Common Stock, (%, month average, NSA) Source: Standard & Poor's Central Inquiry Office, website" from here. OK, so there's nothing special about the S&P figures, but at least we know where they come from which is more than we can say for AndyJackson's range.
Right.
Average, however, is not cheap. Cheaper than average is cheap. Average is just average.
I love idiots like you who select their data to make their point.
For a genuine historical view of S&P 500 P/E ratios you need to cast your eye back a bit further.
The anomolies coincident with Greenspan's glorious rein of unfettered credit expansion stare out through this chart to any who want to see.
The buildings of lower Manhatten totter on their foundations when you utter inflammatory logic like that.
Hold it, this is getting AndyJackson all upset so let's just say values are astronomical and we can all get back to work...
FWIW, I disagree that data from 1987 to 1999 is meaningless. IMHO, this trend still covers the massive transition from most workers covered by pension funds to most workers having to contribute into 401(k) retirement funds and IRAs. I still feel he period from 1982 to 1996 is based on fundamentals, and I draw my conclusions according.
From 1997 onwards, I agree with you 100%. Why do you consider the period of 1987 to 1996 to be within the bubble era of easy money, rather than a fundamental shift in investing?
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