Khris, re: relative valuation
Good post, I think we pretty much agree. I'm not saying that that valuation comparison is the be all and end all, but I was impressed in that it *doesn't* do what Mr. Kernan does on CNBC, take a number like EPS without some other relative measure (as an accountant you know that the way EPS is calculated changes over time). I liked this measure because it compared two of the three major investment classes (stocks, bonds and real estate) on a historical and "clean" basis, and reflects real decisions by investors, and the effects of those decisions.
IMHO, we shouldn't yet write off historical valuation even though we have been in a bull market for (what?) about 6 1/2 years. I suspect that the folks that say that recessions are over forever, when we get into the next one, will think that the downturn will also last forever. I think the business cycle is healthy.
I am curious about your opinion, as an accountant, of changes +/- in free cash flow as a predictor of future earnings for a company. Thanks in advance if you have time to respond.
As far as apologizing for being an accountant, we hear from plenty of engineers and lawyers on this thread, your profession is not at the bottom of the food chain <g>.
John |
