JQP:
"With all the liquidity out there we could EASILY form another speculative bubble. PE's haven't mattered for 5 years. Why should they start mattering now?"
Hoo-law. It's one thing to get caught up in a speculative bubble (1998-2000) on the fumble, it's quite another to be looking for another shearing of the sheep. We won't have another speculative bubble like 1998-2000 for a generation; it takes a generation to forget. Last truly speculative bubble in the U.S. was the age of the Nifty Fifty in the 60's. That ended badly, with a slow drift down to 1981, The Death of Equities on the Businessweek cover. If you're waiting for another speculative bubble, check in about 2036, give or take a decade. You'll know it when it happens, people will be saying, "it's different this time," and "it's a new paradigm, you see." Or simply, "PEs don't matter."
Actually, PE's have mattered for 5 years, just ask people who've lost 85% of their money on New Paradigm Stocks in the last 2 years. It's like the guy who jumped off the 100 storey building. At the 50th floor someone called out, "How ya doing?"
"So far, so good."
In 1999 PE's didn't seem to matter only because it was "so far, so good".
JMVVVHO, as per sempre.
Kb |
