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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (28300)	3/17/2005 8:54:42 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 306849

in spite of theories of peak oil, oil company executives generally believe this run-up in oil prices will be cut short by the next recession. Once burned twice shy. if you think about it, this is the kind of negative, skeptical attitude that often attends a sea change in the market. at the end of a terrible bear market, people always find an excuse for the bull to fail, and often it is the generals fighting the last war. for example, in the late 70s and early 80s, the average assumed return on corporate pensions was only 6%, in spite of the fact that corporations could simply buy long-term US Treasury bonds and get a guaranteed double-digit compound return. the CFOs back then (like the gunshy oil execs today) had been burned by the terrible bear market of 73-74, preceded by the bear market of the late 60s. Businessweek or Time had just had a cover article titled "The Death of Equities". it was the best time to buy since the Great Depression. by contrast, today corporations assume 9-10% pension returns (except Buffett, who is more honest and only assumes 6%), in spite of the fact that long-term US Treasurys have yields under 5% while non-energy equities have high PEs and low dividend yields.