Right now, I am of the opinion that we are in the last phase of a Naz bear market rally, I believe that by Next Wednesday we will start and move back down into a February massacre. I still have the next few days as positive, probably, the catalyst for the start of a decline would be the Fed's pronouncement (whatever they say up to .5% reduction). While coming down from 5000 to 2000 feels like a bear market, valuation wise, we are still richly priced. Take as a measure the total capitalization of the markets relative to the GDP, at the peak we were at 1.84, at the peak of the 1929 bull we were at .84, and at the peaks of the 70' bulls we were at around .7. Since a greater portion of the economy is now reflected in the market cap, we may want to increase the "standard valuation to let say 1.00, but that is still far below where the valuation is right now. IN A BEAR Market, I would not be surprised if the market cap relative to GDP will get to under 1.00. That is one of the reasons I expect a lengthy period of years where the market trade in a broad range (a series of bull and bear market like in the period of 1966 to 1982 where the market went nowhere), until GDP finally catches up with valuations. I have been harping on that "theme" (and that range, more or less) for the last four years her on SI.
Zeev
Zeev |
