Based on corporate earnings the Dow should be trading around 8,000.
But (to quote Michael Savage) "You don't want to hear about this. You want to hear about some guy who hits a ball over a fence."
4 comments:
Anonymous
said...
Schiff keeps talking about; the Dow and ounce of gold having the same value, at some point in the future. It happened twice during 20th century. The Dow has also not made any gains in the last ten years. Cash has had a higher return then stocks, during this time period. This is not very good news for the financial industry.
From a technical perspective, how do you figure this? Do you base the proper valuation on the current P/E vs. average historical P/E or are there more complicated measures used?
Can the difference between the actual market value versus the technical value above be used to measure the psychological (and largely illogical) component of the market's valuation?
It is possible to come up with an insanity (or irrationality) index that can be calculated daily and used to assess when the market is in a bubble?
You will be punished and banned from the financial services industry for suggesting people's retirement plans are going to be inadequate. You are hurting people's feelings.
I use Robert Shiller's historical P/E ratio and based it on the historical P/E of 15 that the market has historically traded at.
I also look at labor productivity and other "measures" (which I keep proprietary) which more or less gauge the productive ability of Americans. Those are in the toilet and therefore I doubt we're ever going to produce the economic production and profits needed to rationalize a Dow of 11,000, let alone a Dow that grows at 8% a year.
4 comments:
Schiff keeps talking about; the Dow and ounce of gold having the same value, at some point in the future. It happened twice during 20th century.
The Dow has also not made any gains in the last ten years. Cash has had a higher return then stocks, during this time period.
This is not very good news for the financial industry.
Cap'n -
From a technical perspective, how do you figure this? Do you base the proper valuation on the current P/E vs. average historical P/E or are there more complicated measures used?
Can the difference between the actual market value versus the technical value above be used to measure the psychological (and largely illogical) component of the market's valuation?
It is possible to come up with an insanity (or irrationality) index that can be calculated daily and used to assess when the market is in a bubble?
What was Greenspan's term for it? "unwarranted exuberance"?
Now now now gentlemen.
You are pointing out the Emperor has no clothes.
You will be punished and banned from the financial services industry for suggesting people's retirement plans are going to be inadequate. You are hurting people's feelings.
I use Robert Shiller's historical P/E ratio and based it on the historical P/E of 15 that the market has historically traded at.
I also look at labor productivity and other "measures" (which I keep proprietary) which more or less gauge the productive ability of Americans. Those are in the toilet and therefore I doubt we're ever going to produce the economic production and profits needed to rationalize a Dow of 11,000, let alone a Dow that grows at 8% a year.
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