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Strategies & Market Trends : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: Lee Lichterman III who wrote (59083)	11/9/2002 10:17:21 AM
From: AllansAlias	Read Replies (1) \| Respond to of 209892

OK, you have dibs on 3.5 -g An excerpt from Mauldlin's latest @ 2000wave.com. I have reformatted it a little. ---------------------- Jeremy Grantham is right. Markets always come back to trend. He presents us with the benefits of his research into bubbles. He has looked at every bubble for which he could find data. His research goes back years and years and includes stocks, bonds, commodities and currencies. He has found 28 bubbles. He defines a bubble as a 40-year event in which statistics went well beyond the norm, a two-standard-deviation event. Every one of the 28 went back to trend, no exceptions, no new eras, not a single one that we can find in history. He then argues the broad U.S. market today is still in bubble territory, as it has not come back to trend. [Let me repeat for emphasis: with no exceptions, bubbles and markets will come back to trend.] He notes that many markets and bubbles not only come back to trend, but go down right on past the trend line. What is trend for the US markets? He gives us four measures. * Based upon dividend yield, the market is overvalued by 50%. * Based upon Tobin’s Q (the market value of a firm's assets divided by their replacement value) the market is too high by 31%. * The price of stocks to the 10 year average of real earnings is too high by 31% * As a function of market cap to GDP the market would need to come down by 45% to get back to trend.