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Strategies & Market Trends : Raptor's Den II
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To: da_cheif™ who wrote (611)4/24/2003 10:04:36 AM
From: SOROS  Read Replies (3) of 3432
 
"and why do you say we are not even close to wringing out the excess of the bull"

I know 13 points was a little too much for you to contemplate. How about only one? It directly relates to your question above. Please, for the edification of the entire thread, share with us your deep knowledge as to why this historical fact is so irrelevant.

12. Put this all in perspective. There have been three long Bull markets in the last 90 years. From 1913 to 1929 the market got to a PE of 20. It then collapsed, and did not reach a bottom until 1949 where the PE was 5.4 and there was a dividend yield of 7.5%. That's a 20-year decline after a 17-year Bull. Then, from 1949 until 1966, the market again reached a PE of 20, but the subsequent decline too it to an eventual bottom of a 6.8 PE and a dividend yield of 5.7% in 1982. That's a 16-year decline following a 17-year Bull. Now we have another 17-year BUll from 1982 until 2000. But there is a difference this time. The PE reached 40. So where are we today? How great of a value is the stock market after a 3 year decline? Based on the TRUTH -- taking options and pensions into account -- the PE is about 46!!! The Bulls love history when it points to some obscure "fact" that supports buying stocks. Let them calculate where stocks will be if the market returns to an "historical" valuation of a PE under 7 and a 7% dividend. Greenspasm's rate cuts have done little or nothing to help for the first time in history. SOROS Additional Note: This is because the problem is STRUCTURAL.
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