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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: UnBelievable who wrote (71328)2/23/2001 9:34:22 PM
From: pater tenebrarum  Read Replies (12) of 436258
 
yes to both. even if it were to get to the point of being fairly valued, which would be per se quite a shocker, the question then arises if it will get undervalued. bear markets in the past have been known to overdo it on the downside w.r.t. valuations.
the general assumption nowadays seems to be that the legitimate way of judging valuation is where it is in relation to the valuation at the peak.
while it is by now with hindsight fashionable among analysts, money managers,etc. to call the pre-denouement NAZ a bubble, they still offer comparisons to an acknowledged mania's peak valuations as if they had any meaning. no-one has as of yet dared look at past bear trough valuations or seriously considered those doable.
begs the question why not...because it would look very bad on the chart? of course it's psychologically difficult since applying the historic trough p/e of 15 on trailing earnings (which happen to be worsening) on the NAZ results in price predictions that sound unduly gloomy. also the experience during the time the bull phase was still intact was that stopping points for declines were found at the upper historic valuation range rather than the lower.
obviously this decline is already different from what happened before...and yet it is largely viewed as a temporary anomaly.
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