Author Topic: rule of 20  (Read 1240 times)

ericopoly

  • Guest
rule of 20
« on: March 21, 2009, 11:30:32 PM »
Thoughts?  We've had these discussion before about P/Es in 1981, whether inflation rates should influence the P/E etc...

http://seekingalpha.com/article/126347-s-p-500-p-e-ratio-at-troughs-a-detailed-analysis-of-the-past-80-years?source=article_lb_author



sfwusc

  • Newbie
  • *
  • Posts: 17
Re: rule of 20
« Reply #1 on: March 23, 2009, 08:35:42 AM »
I like how he said low PEs only happen during high inflation so they won't happen, but then one of his examples was 1932.  I stopped reading right there.  If he think inflation was high in 1932, then we have been in high inflation since 1932.

Who knows what is going to happen. You can be bullish or bearish.  You can think we are going to have inflation or deflation.  Yet, using some chart rule to show we aren't going lower is nuts to me.


I don't think we have hit bottom yet.  I didn't think we hit bottom in 2002-03 either when the markets went back up to new highs on the DOW.   I don't know what is coming, and I don't think the charts know either.

Historical margins with a reasonable PE vs GDP/Sales analysis will scream over valued to fair value right now even after the huge drop.


-SFWUSC