And the glamour stocks of the late 1920's had P/E's only into the 40's and 50's. Those would be considered value stocks by today's standards.
But they were also being thrust up to that range on the basis of 90% margin.
But overall, I see market rotation into value stocks (banks.. etc), with some limited exposure back into Net and net infrastructure names with earnings, little debt, and cash on hand, and not a full fledge, down and dirty recession. Especially since AG came out today and tacitly acknowledged what all of us already knew, that we're slowing quickly... too quickly, and that he will need to act sooner rather than later.
And about that explosion? I wouldn't get to worried about it. There is so much overhead supply and resistance in the Nasdaq, that it will take a year or more to replace all the folks who will be grateful just to have their money back.
One final point though.. what will determine the long-term course for this market is money flow into pension plans, IRAs, and 401K. Most people socking money into these are not position trading, or even even looking to sell at the highs. They are just adding... and adding... and adding...each and every quarter, until the time when they draw close to retirement, at which time they will be going into bonds and fixed incomes...
As Harry Dent has stated, the baby boomers are like "a pig going through a python" with regard to our economy. And they they may not yet be at the height of their earnings potential yet (since for most.. their kids are finally getting out of their hair and the college bills are paid off)
Money flow... and having a place to park it... No other economy on this planet has the ability to meet those requirements at the moment.
In fact, since Japan and Europe will likely remain on course for increased deficit spending in order to deal with their pensioners, the US is the only game in town.
Regards,
Ron |
