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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (12746)7/16/2002 8:29:11 PM
From: Bill Harmond  Read Replies (2) | Respond to of 57684
 
The secular bull market from 1982 was based on disinflation. As inflation subsided long term rates came down from nearly 14% in 1981 to under 5% today. That allowed not only capital investment to increase and business to grow, but p/e ratios expanded because net present value of the future earnings is greater.

As a point of comparison, the p/e ratio of the long bond went up from 7 (14% yield) to 20 (5% yield).


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