Re: Newsweek - Several interesting points from articles in that issue:
1) From the "Yes, it can continue" article, is the fact that, taking the market slump from 66-82 into account, the last 32 years have averaged only 7% a year growth over inflation, which is about the historical average. This suggests that we don't have to crash to return to normal, just drop back to 7-10% annual rises.
2) From the same article, it was suggested that the high PE's of today may be in part due to the increased amount of money flowing into the market from overseas. "Historical averages" come from a time when cash flow into Wall St was largely a US phenomenon. With a bigger pool of cash able to value equities, the higher PE may not be out of line.
3) From the "It's got to Crash" article, the very first point was that there is a bull on the cover of the magazine, so the market must be ready to correct!
If everyone knows a contrary indicator when they see it, is it really contrary?
Pete |
