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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Chispas who wrote (104547)	8/21/2009 5:40:30 PM
From: Chispas	Read Replies (1) \| Respond to of 110194

"History Shows Today’s Stock Market Is Very Expensive" . Blogs,WSJ - August 21, 2009 ........................................................................................................................................................ Considering the market heights of the recent past, it may not feel like the market is expensive. It might feel downright cheap. After all, the Dow Jones Industrial Average is hovering near 9,300 and the S&P 500 near 1,000, levels just two-thirds of indexes former glories. Throw in the earnings factor and suddenly, those levels look particularly high — and that is the subject tackled by the folks over at Chart of the Day. The COT guys examine price-to-earnings ratios since 1936 and what they find does not bode well for investors long in the market today. From 1936 into the late 1980s, the PE ratio tended to peak in the low 20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s) and the dot-com bust (early 2000s). As a result of the recent plunge in earnings and recent stock market rally, the PE ratio spiked and just peaked at 144 – a record high. Currently, with 97% of US corporations having reported for Q2 2009, the PE ratio now stands at a lofty 129. ........................................................................................................................................................ blogs.wsj.com

To: Chispas who wrote (104547)	8/21/2009 9:37:09 PM
From: Chispas	1 Recommendation Read Replies (1) \| Respond to of 110194

Floyd Norris - "Why Are Banks Failing?" - Aug. 21, 2009 ...................................................................................................................................................... What ails banks? This morning, there were two available answers, one in my column in The Times, and another in The Wall Street Journal. I emphasized bad loans at the banks that have been failing recently; The Journal emphasized dubious securities, and pointed to the expected failure tonight of Guaranty Bank. Both are right, of course. It seemed to me that we already knew a lot of securities were toxic; that is why the banks don’t want to let us know market values of them. But I still think we will see a lot more smaller banks fail due to bad loans. Here’s the scorecard for tonight. Guaranty Bank did fail, as expected. The acquiring bank took $12 billion of assets, but demanded loss sharing agreements on $11 billion of those. We don’t have details, but it appears that the acquirer trusted neither the loans nor the securities Guaranty held. The first failure of the night was eBank of Atlanta. It appeared to own no securities, but to have lost money on real estate loans. Another Georgia bank, First Coweta, also failed. It appears to have been done in by mortgage loans, not securities. The fourth institution closed tonight was CapitalSouth Bank in Alabama. It has some debt securities, but they do not appear to have been a big problem. The problem was construction loans. For what it is worth, the F.D.I.C. estimated that its losses from Guaranty would equal 23 percent of the bank’s assets. The losses from the other three ranged from 24 percent to 44 percent, with eBank being the worst. ....................................................................................................................................................... norris.blogs.nytimes.com