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Strategies & Market Trends : Value Investing
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To: Spekulatius who wrote (61827)3/24/2019 11:33:35 AM
From: Graham Osborn3 Recommendations

Recommended By
geoffrey Wren
John Koligman
Lance Bredvold

   of 78913
 
Yeah, we haven't seen the Shiller PE below 30 for any significant period since 2017. Not that that means anything in and of itself, but it's pretty reflective of the prices I see on my watchlist - only one mid to large cap with a PE below 20 even after Friday. Those are mostly companies with earnings growth north of 20%.

At the trough of the dip in December there were a couple things in the 17s-18s.

This is still very much a sellers' market.

I don't see the blue chips looking particularly cheap unless the Shiller PE gets down below 20, which we haven't really seen since 2010 or so. Central banks have been heavy purchasers (or reluctant sellers) of securities in recent years, but there is an old saying that noone is bigger than the market - not even a consortium of central banks - over the long run.

If I had to bet on the most likely return of the S&P500 over the next 10 years, it would be zero. Maybe 4-6% corporate profit growth (assuming no recession), stock valuations about double the long-term average. My bet is 2020s looking similar to 2000s, the 1970s, or the 1930s. With the exception of the 2010s, we've never had a decade where the Dow/ S&P500 performed well from a start SPE of >20 over the past 100 years (and never above 30). I have no doubt there will be plenty of excitement (and maybe a few significant buying opportunities for the blue chips) along the way, but unless the rules of the game have changed the next 10 years have a greater than 25% probability of being another "lost decade" for index investors.
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