Valuatons are better, relatively speaking. However, P/Es are still slightly above long-term averages. They touched their average briefly on Tuesday. It's certainly possible--and expected--that P/E should swing the other way (revert pass the mean) for a bit. It hasn't happened in two decades, but it surely could happen.
I remember 2000. That's when I became very short-term oriented after 2 years of being intermediate term trader enjoying a perma bull. After the bull of 2003 began though i started becoming more and more accustomed to being longer term investor ( i am still holding some positions accumulated in 2004 which is amazing for me). Now i started my own blog focusing on dividend stocks, which outperformed the market during the 2000-2002 downturn. You can view my current picks here: http://dividendgrowth.blogspot.com/2008/01/my-current-watchlist.html Oh yeah, and if the tuesday low is not violated, then we might avoid the next 2000
Inflation outlook, more precisely bond yields, determine acceptable PE. There's not much downside unless bonds go to 10%+ yields... Here's the whole analysis I did a week ago... http://scriabinop23.blogspot.com/2008/01/obligatory-armchair-s-valuation.html
Thanks. That's an interesting take on PE and valuations. There are others, though. http://www.hussmanfunds.com/html/barrons.htm http://www.hussmanfunds.com/wmc/wmc080121.htm
yea hussman is a pretty sharp guy ... i need to finish my work of showing historic PEs normalized to fixed income yield. It definitely smooths out the price history.
Will have a look. But just did this last night to followup on the conversation. 10 year yield and S&P correlation: http://scriabinop23.blogspot.com/2008/01/s-relative-value-to-10-year-note.html Followed up by 90 day T-Bills vs Fed Funds #s: http://scriabinop23.blogspot.com/2008/01/t-bill-versus-fed-funds.html You can see how they somewhat correlate, as well.
2008 the new 2000...... Hopefully everyone's taking notes. I've got 3 IRA's pulled now 2 near the top and 1 the day the fed cut. Guys are calling me wondering when to get back in lol.... Told them to take a 2 year nap.
And what experience do you have? You were around in 2000? Don't make me laugh. Try 1981-1982 or Maybe even 1973-1974 Then get back to us, Mr. Voice of experience!