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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (28858)	10/8/1999 6:23:00 PM
From: Matthew L. Jones	Respond to of 99985

Interesting observation. Makes sense, though. How about some comments from some of the thread's economists??

To: Jacob Snyder who wrote (28858)	10/8/1999 6:26:00 PM
From: pater tenebrarum	Respond to of 99985

Jacob, this assumes that the future course of inflation remains as tame as you suggest, which is possible, but not certain. an alternative scenario not represented in these examples is deflation...while deflation is rare, we can not rule out that it will occur again. in a deflation scenario, stocks perform especially badly. one more thing: the valuation peaks of the periods you have looked at, once again were MUCH lower than the most recent one. so it is possible that a relatively smaller rise in inflation will have a bigger effect on p/e contraction than in the past. in any case, many thanks for presenting these data...very interesting indeed. one thing has to be noted with regards to '87: inflation accelerated much more quickly in '87 than now. that's one of the main differences between now and then. everything else seems strikingly similar. regards, hb