To: michel ciambra who wrote (17687 ) 3/15/1999 7:04:00 PM From: Oeconomicus Read Replies (1) | Respond to
michel, hardly sensationalism to express one's opinion of a market top. I seriously doubt that Roger is "oblivious" to much of anything. Though I may not agree with his prediction of rising inflation or that the recent rise in interest rates is anything more than a short-term blip, he is very right about one thing to which you and other "this party's not over just yet" bulls do seem oblivious. Did you know that the S&P 500 now stands at a PE multiple of 34.7? That's a good ten or eleven points higher than any peak prior to this extended bubble and most prior peaks, as someone else noted, came at times of depressed earnings late in recessions - i.e. at the beginning of a recovery. Are you suggesting that corporate earnings will surge ahead at 20-30% or higher for the next 2-3 years to bring valuations back toward historical norms? Or, are you suggesting that 30+ PEs are to become the norm due to some mysterious change in the laws of finance and economics? The fact is that interest rates are up about 3/4 of a point since last fall and that earnings (S&P) have done nothing but shrink for the last two years while the market's valuation continues to expand.
