Historically, bear markets run from 6 to 24 months. Some have gone longer and go to 36 or more months. Do not think this present situation will resolve itself this spring, summer, or fall. Nope. Not if history has anything to say to us.
Historically, we will be looking at the average p/e ratio (remember p/e?) on the S&P to be lower than 15. Look for 12, 10, even 8. If history has any relevance.
Even with the carnage over the last year in the broader market--really good company stocks have been in a bear market--and with the recent bloodletting in the high flyers, the average p/e of the s&p is still way above the historical average (which has been approx. 14-15). If history has any relevance, we still have a long way to go to the average and bear market bottoms are characterised by selling frenzies (we're not done yet!) that bring the average p/e ratio well below the historical mean (to the levels noted above).
As I wrote in my previous cautionary notes, not even great companies like JDSU will be immune, in my opinion, from the bear market carnage. I thought (my opinion)company stocks like JDSU are more vulnerable because of the exceedingly high valuation. The fall to historical norms, I thought, had to be harder and farther. I don't like this one bit. I have been 95% cash since the end of January and so am not really touched financially but I still feel horrible. I wish it wasn't happening. Yuck!
Ciao,
David Todtman |
