I could not agree more! Vince Farrell was just on CNBC comparing this market to the end of the 1960'S. He said forward multiples, are currently 22-23 for the S+P and that is the highest ever. He thinks that earnings expectations are to optimistic, and as we have seen, companies like INTEL and MOTOROLA are warning of slowdowns. These companies have enormous trickle down effects on the rest of the economy. At a minimum, he thought forward P/E will come down to 17-18, where it was in the late 60's.
IF we continue to have low inflation and low interest rates, then the market could sustain that level for awhile longer, but 23 forward P/E is out of this world, especially given the current earnings environment. I expect to see at least a 20% correction in the market somewhere in the next 6 months. I also expect that it will NOT be a one day drop of 700 or 1000 points, but rather, many continuous days of slow erosion, as the dip buyers get longer and longer, but the rebound never comes.......
Then it will be a matter of how panicky people become in a year when they have spent all their money buying dips, and the market has not bounced back.....if they start to sell, major bear market could ensue. if not, we languish at 6000-7000 range for a long time..........
Good luck, time to sell into the rallies, NOT buy the dips, and start taking money off the table, IMHO.......;^) |
