Michael, for whatever it is worth, I do not think that it will be like 1929. The reason is the economic environment. Then the actual economy actually contracted almost 30%, end demand disappeared, and the process of economic collapse took its toll on the market (and actual bottom was actually late in coming). On the other hand, we may go into a period like the 1966 to 1982 period in which the economy grew generally, but with recessions every two three years and associated bear markets punctuating these recessions.
Thus, even if we reach a temporary low here around 2900 or so on the NAZ (or lower, who knows), I do not think that it is going to be the low. I see a long period of relatively wild gyrations in a broad range allowing earning to actually grow and bring valuation measures with historical standards (PE being roughly the proven long term growth of the company). Even idf we assume that on the average, for the NAZX this is 20, we are still a far cry from that. In the next five to 10 years, the dart method will fail, IMYO, and selecting stocks that lead their fields and that are in fields that have intrinsic growth rate far superior to the growth rate of the GDP will be the successful modality, also just IMHO.
Zeev |
