History of bull markets rife with folly (The Worst Is Yet To Come)

CBS Marketwatch ^ | 30 July 2002 | Tom Calandra

[Dog Gone]

Yes, it's me. Look my stock price today.

[headsonpikes]

Look, you pathetic little drone-- if you want to address me you know my name.

You show as much independent thinking here as on any other issue, I regretfully note.

[headsonpikes]

I'm not worthy, I'm not worthy...lol!

[Doctor Stochastic]

Actually, the bull began in 1982. (With blips.)

[Destructor]

Listen, you gay dervish-- You're not an "independent thinker." You're a Stock Broker's wet dream.

[eno_]

What this article, and what Warren Buffet has said, is that there is typically an undershoot on P/E ratios after a market bubble. This does not mean that stock prices in either nominal of inflation adjusted terms will be lower. EPS could be growing through the bubble and the bust. So composite market indexes would not have to be lower, as you claim, just P/E ratios.

[headsonpikes]

"Listen, you gay dervish..."

Now, that's amusing! Much better!

Still, I don't think that counselling folks to diversify stock-holdings so as to include precious metals constitutes being a broker's 'wet dream'.

The general equity market was manipulated up; let's see how TPTB manage the deflation of the equity bubble.

Of course, you may feel that these tawdry scammers are on the side of the angels.

Call me sceptical.

'gay dervish'...chuckle...;^)

[RightWinger]

Gee, I'm $40K in the hole, I hope it's over. {;o)

[Torie]

America's 500 biggest stocks are selling for anywhere between 25 and 40 times one year's earnings,

The bulk of the earnings reports are in now for the 2nd quarter, and trailing earnings for the SP 500 are about 46, which makes the PE ratio about 19.5. The handwringing is overdone at this point as we come out of recession. The market is fairly priced or near it in my opinion.

[El Gato]

Come on, if after each major bull market, the market would have to crash to BELOW the level that started the bull market, then the long-term trend in stocks would have to be negative. (And it's not.) Unless, of course, you pick and choose only the few major bull markets that fit your thesis.

Not true, even if you include all MAJOR bull markets. (Of course how to define a major verses a minor bull market might be up for debate). A lot of minor ones could account for the few major ones that all went sour. I'm not saying this is true, just that it could be.

[headsonpikes]

Informative post. ;^)

You are exactly right about the 'earnings' scam.

[arete]

Scares me when they are so desperate to sell a bill of goods.

Listen to the drumbeats of war. They are telling me that the economy isn't as good as the spinners are claiming it is.

Richard W.

[GallopingGhost]

The bulk of the earnings reports are in now for the 2nd quarter, and trailing earnings for the SP 500 are about 46, which makes the PE ratio about 19.5. The handwringing is overdone at this point as we come out of recession. The market is fairly priced or near it in my opinion.

A quick look at the Dow 30 Industrials shows that the average PE ratio is at 24.9 which includes Intel's 62.9, Honeywells 41.9 and Eastman Kodaks 42.4. If AT&T and Intl Paper weren't underwater they would certainly bring the average down close to the 20 mark. So if you just look at the Dow Industrials (which way too many people judge as "being" the stock market) it doesn't look too far from acurate.

On a side note I heard a couple of the talking head economists suggesting that high teen PE's are now really kind of low.

[Torie]

There is some confusion between reported earnings, operating earnings, and reported earnings under new FASB rules that excludes writeoff of goodwill. The 46 was end of first quarter trailing earnings, apparently in the third category. I am inquiring further.

[desertcry]

...I'm $40K in the hole...... Gee you are lucky, some retired people I know are more than $400K in the hole. Lucky me, I don't have any money, so I did not lose any. Since 2000, poor people seems happier, so you guys/dolls out there don't work too hard, or be too greedy, be happy.

[eno_]

Excellent post, dude. Keep it in your pants until we are below PE ratios of 15. If anyone knows how to predict and profit from bounces, they are smarter than me. I'll wait until even the stupid can profitably invest.

[headsonpikes]

"I'll wait until even the stupid can profitably invest."

Sage advice, indeed! I'm going to borrow this phrase from you. Thanks.

And there are, and will be, continuing opportunities to follow just such a strategy.

[bandlength]

moribund rebound