Gary,
you said:
<<Higher highs, higher lows. Its called long term investing in good
companies.>>
Unless you have a genius for picking the WMTs in the early 70s, or MSFTs in the mid-80s, you're stuck with the rest of us, affected by overall market trading patterns.
Your comment makes perfect sense looking in the rear view mirror, and describes the behavior of a 16 (or 24) year bull market. But it does not describe an immutable law of market behavior. Ignore this at your peril.
Gary, US equities are at valuation levels never seen before. At the end of 1996, Alan Greenspan spoke of the market's irrational exuberance. At that point (c. DJ 6500), P/E, P/d, Mkt cap/GDP were at levels that had only been reached a handful of times before, and all but one (1987) was followed by a multi-year bear market that saw equity investors lose between 40-89% of the value of their portfolios.
Since that point of extreme overvalue, the following have happened:
- the market is up 45% or more, depending on the index
- earnings have been essentially flat (!!!)
- the global situation has deteriorated to an extraordinary degree
- valuation levels are above our historical experience. This is a speculative bubble, the likes of which you'd only see once every several centuries
- etc, etc, etc, etc ....
Peter |
