Re: History has already shown us what happens to credit bubbles, be it 1929 US , be it 1990 Japan, 1980 Gold, Tulip Mania, South Sea Bubble, etc. There really is, via the law of averages, one direction this market should go. Down the toilet.
Eric,
Actually, the world has never seen a bubble this big. We're in unchartered waters at the moment.
Look at the GDP vs. total market value in '29 or Japan in '89, compare that to the current US market. Even after the current blowoff, it's still higher than was seen at the top of Japan or the top of '29.
Also, the Naz 100 at current levels is still trading with a higher P/e than the Nikkei ever got to at its top (this includes 17 Naz stocks that don't even have the "e").
The Naz 100's 83 stocks that do have the "e" trade at about 120 P/e's (last I checked, this may have changed). Traditionally, the Naz trades with a P/e of 25 to 40.
Anyone that thinks we are even close to a bottom is fooling themselves and looking at the market through rose colored glasses. I wouldn't be surprised if this bloated market were to take years to unwind (yes years).
chic |
