Thanks for sharing the hard work, a really enlightening table. I for one am worried,however, that the PE's are too HIGH. Japanese banks are teetering. If Japan loses exports to non-J Asia, their banks are going to have to start selling US interest-bearing securities, and we are definitely going to feel it. Strong selling pressure on the bond/treasury note side is going to play havoc with the US money markets. The bull market can crash, and don't you doubt it.
A stock I follow, SunTrust Banks (which Warren Buffett holds, to give you an idea -- razor-sharp management, solid bank), has followed its PE up from about 12 to about 22 in the past couple of years. SunTrust is not about to go under, but I can easily imagine a scenario in which its stock price goes from 66 to 50. That puts the Dow at 6000.
If STI goes to 50, Cymer will be wallpaper. Okay, I'm exaggerating, but it is entirely possible for overextension in Asia to throw us into a recession, or at least a 20% stock market dive, in which case Cymer will be selling in the single digits. I actually think a repeat of 1929 is almost impossible at this point in the US, but not in Asia. Remember, even Hong Kong doesn't have insured bank deposits.
Okay, enough doomsaying. I don't think it's going to be that bad, but I do think some defensive positioning is prudent right now. |
