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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1322)	2/22/1999 10:24:00 AM
From: Freedom Fighter	Read Replies (2) \| Respond to of 1722

>>Either there's a new paradigm or this is the biggest bubble that history has ever seen.'"<< >Why can't it be both --???> My suspicion is that the aggregate of American business can't be worth more than twice what it would cost to replace it. That's what it's selling for now. Certainly individual businesses can be. But all of America? My guess is that the replacement cost "in aggregate" will be mean reverting give or take and the "real" return on equity in relationship to its cost will also (give or take). The latter would indicate that aggregate PEs should also be mean reverting. All of the above; replacement cost, real return on equity, and PEs have been mean reverting for about 200 years. It's hard to imagine that this is an accident and not not meaningful economic relationship. In any event it seems like a very bad wager to go against logical relationships that have been verified by actual events for 200 years in multiple countries. I vote a bubble that is the result of temporary global macroeconomic conditions and the fiat currency system. If the fiat monetary system and rampant speculation makes it a new paradigm, then I vote for both. Wayne Crimi