Question From a Viewer Who Disputes Our Near-Term Outlook 10/09
Charlie and Marty,
First off, I am a long time reader of your website and I do appreciate your commentary. However, at this time, I think you are missing the boat [in the short term only!!].
Could it be possible that things are not as bad going forward as they appear? The treasury yield curve is steep; the leading indicators have been on the rise for the past several months and are near all-time highs (ECRI weekly leading index), and although the employment situation is very bad, don't the recent numbers suggest that it is turning around?
While I agree that the stock market is decidedly overvalued, I would like to point out that PE's have been rising on average for many years, so using a historical average that does not adjust for this long term trend may not be appropriate. Although price to sales, dividend yields, and many other ratios are also decidedly unfavorable, that might simply reflect that the current environment is dominated by speculators, rather than investors. Many market participants are simply looking to make a trading buck, rather than investing. I think the statistics support this (margin debt, dollar trading volume, etc). It is indeed a signal of a financial bubble, and will ultimately have devastating consequences. But in the short term, given the technical market strength, I cannot imagine how being short ANY stocks would have made you any money.
Charlie and Marty,
First off, I am a long time reader of your website and I do appreciate your commentary. However, at this time, I think you are missing the boat [in the short term only!!].
Could it be possible that things are not as bad going forward as they appear? The treasury yield curve is steep; the leading indicators have been on the rise for the past several months and are near all-time highs (ECRI weekly leading index), and although the employment situation is very bad, don't the recent numbers suggest that it is turning around?
While I agree that the stock market is decidedly overvalued, I would like to point out that PE's have been rising on average for many years, so using a historical average that does not adjust for this long term trend may not be appropriate. Although price to sales, dividend yields, and many other ratios are also decidedly unfavorable, that might simply reflect that the current environment is dominated by speculators, rather than investors. Many market participants are simply looking to make a trading buck, rather than investing. I think the statistics support this (margin debt, dollar trading volume, etc). It is indeed a signal of a financial bubble, and will ultimately have devastating consequences. But in the short term, given the technical market strength, I cannot imagine how being short ANY stocks would have made you any money.
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