Chuzz- I agree with your concern(s)...my point is not that the market is, somehow, permanently insulated here..not at all....but that perhaps now (let's take the S&P 500) would go from a mean 31 PE to an 18 PE......however, in the past, the PE number may have been 20 to 10 respectively...
Note that the NEW low PE is almost as high as the OLD high PE....
Possible? I think so...
So, in other words, this liquidity has put a "floor" on the market...IMO, it would take a prolonged recession, not just one quarter or two, to drive a stake thru the heart (morbid) of the stock-crazed individual investor.......It will take a severe economic downturn to kill the "buy the dips" theory........look, who panicked (primarily) in October...the pros! At least as much as individuals..
I certainly feel that many investors (rightly or wrongly) feel empowered by surviving what happened last October...and like the child playing with matches...will not get scared until they really get burned....
So, given that many of us are long-term holders here, maybe the real question is: When is the next recession (or higher interest rates) coming? Fortunately, I don't see one in the near future....
What else is (for a long period of time) going to take this market down (and keep it there)...and take massive flows of liquidity out?
BTW- An economic slow-down would probably have a chilling effect on the IPO market, but would (also) probably slow down the current acquistion craze...so I'm unsure how it would effect overall stock supply... |
