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Politics : Stockman Scott's Political Debate Porch
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To: lurqer who wrote (14626)3/14/2003 11:48:06 PM
From: lurqer   of 89467
 
weekend reading

While there is much to like in this article - particularly the "Waterfall Indicator", I had a problem with

History plainly teaches that until the US equity markets are undervalued, any chance of a long-term secular bull once again emerging is purely wishful thinking.

It's not so much that this statement is wrong, as misleading. Actually, what history teaches is that for a long-term secular bull to begin, undervaluation is a necessary, but insufficient condition. For the secular bear that began in '29, the P/E compression plunge ended in '32. On an inflation adjusted basis, the next secular bull began in '49. For the secular bear that began in '66, the P/E compression plunge ended in '74; the next secular bull began in '82. Clearly, something else besides valuation is required for the emergence of a new secular bull. I believe the sufficient condition is demographic spending. On this basis, I see (using my three-D model)



Delusion             Despair         Disgust
'29                    '32             '49
'66                    '74             '82
'00                  '07/'08           '18



lurqer
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