Quasar, I do not disagree with you that many stocks are correctly valued, the problem with the nifty fifty is that they are the last to fall in a bear market (by whatever measure), so if your assumption is that most stocks are in a bear market since 1998, then you must see the parallel to 1969 and 1973, when the "generals" finally caved in and brought the rest of the market with them to a new nadir. You rarely get a new bullmarket until excesses has you have described are corrected, in all segments. Some of those "generals, never recovered (Xerox, Polaroid and quite few others). The way I see the next five years period (and include in it the last two years), is a market which is stalled in a broad range (currently I have 1900 to 5200 on the Naz and 6000 to 12500 or so on the Dow), very similar to the 16 years period of 1966 to 1982, when the Dow was locked in the range of 500 to 1000. The S&P 500 is way out of its historical norms, and historically, the markets return not just to the norm, but to much lower than the norm (at the bottom in 1982, the SP's PE was under 10, if memory serves).
Zeev |
