Patrick, I'll agree that markets are relative.. but I'll hold off on agreeing that "everything is relative."
In making judgements on valuation most resort to FA or TA, but there's another powerful force which is the political/economic strength of the country.
The world is at economic war though we commonly use different terms like trading blocks-alliances, import export duties-tariffs- agreements, balance of payments, currency reserves buying and selling, printing of money and a host of other terms. They all describe day in and day out conflict which isn't always directed at resolution or peaceful intent.
The country or countries winning the war at any given time will be allowed a premium valuation for their stocks... sometimes in the face of obvious over valuation.
Beginning in the 90's there's a new kid on the block. Its not just country against country, alliance of countries against alliance.. but new international pirates (warring parties without a national interest)... like Long Term Capital Management, Soros, and many we don't see in the news. They cruise the international markets with satellite transfer speed pouncing on weakness and opportunity.
Much like Europe had to coordinate against piracy, the world's nations today have to coordinate against attacks, while doing battle with each other, while making agreements of convenience with pirates.. Soros on Russia.
To get a measure of how much clout these entities have consider that LTCapital leveraged nearly 125 billion.
I'm discussing this because as we compare past bubbles or market highs its well to also consider the political strength underlying the nation's market. The US market has varried in influence on a world stage since 1929. This doesn't dismiss business cycles, its just another perspective on estimating valuation and strengths. |
