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Strategies & Market Trends : ahhaha's ahs

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To: ahhaha who wrote (1608)	3/18/2001 7:49:58 PM
From: M. Frank Greiffenstein	Read Replies (1) of 24758

Another unrelated question intriguing me is whether stock prices in 1929 really were in a bubble. They weren't. In the '50s the DOW surpassed the '29 high. It depends on how one defines "bubble". You lost me with this assertion, ah. Nobody ever defines a stock market bubble in nominal terms of DJI levels. There were more goods and services produced in the 1950's then in 1929. You are right though, it depends on how you define it. There has to be some meaningful divisor, like PE, sales to price, or the Tobins Q. Talking about Tobin's Q, I think the ratio of stock market valuation to the value of the economy is still north of 1.0. In the past ratios of .75 were considered the cutoff for a bubble. Happened in 1929, 1969, 1973 and 1987. Sometime in 1995 we passed it without damage and it got as high as 1.75 in March 2000, I believe. What are your thoughts on Tobin's Q? Doc Stone

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