Understand. What I implied is that if volatility is going to increase like the 98-00 blow off phrase, and that we are at the starting point only (200 points S&P higher), the new calculation method can have an interesting effect that magnify/dampen the volatility.
Thats dynamic thinking. If you're going to be a successful doom and gloomer, you're going to have to think more statically. Say for example, if you were driving a car, and started to take a right turn from Park Avenue to Washington Street. During the turn, a doom and gloomer would assume that the car would keep turning through the corner and then would continue the turn into a building, killing innocent bystanders. I sat next to one on an air flight once. Every time the pilot would decrease his altitude, he would holler out, "We're gonna crash!". It was unnerving. SM
With PEs at 15 there is no way we fall more than 30% to a PE of 10 which would be the lowest valuations level in over 25 years. The only risk is the 'value trap.' Bear market of epic proportions - hell no, I don't think so. We've been in a valuations bear market for over 7 years now.
2 things- 1- the "E" can change substantially in your PE thus allowing a further drop in share price to match it. 2- he said the market could just be flat for an extended period of time, which is very bearish in that the entitlements for the retinring baby boomers were modelled off of long term double digit gains in the S&P. Treasuries will yield more in that instance.
S&P 500 Summary Statistics: The S&P 500 Index is a modified capitalization weighted index. A pure capitalization index is constructed by first multiplying each stock's price by its total number of shares, second adding these cross-products, and third dividing the sum by the index divisor. Originally, the S&P 500 Index was a pure capitalization index. A modified capitalization index is based on something other than the total, actual number of shares outstanding. On September 16, 2005, S&P changed to a modified capitalization index based on each stock's floating number of shares. Specifically, shares held by any company's control groups in excess of a ten percent threshold will be excluded from the index. Accordingly, the table below reflects floating market capitalizations based on each stock's number of floating shares. http://www.indexarb.com/capitalizationAnalysis.html
Sorry, I have to repeat myself - did it several times in other "macro" discussions on this board : 1) What about international growth rates ? As I remember I read an IMF paper citing global growth rate at 5,2 % ! Doesn´t it make the "E" a little bit more "global E" ?? Impact on blue chips ?? 2) Cheap money still obtainable. Read => http://www.ft.com/cms/s/0/45ac8020-657f-11dc-bf89-0000779fd2ac.html Banks are increasingly turning to Japan to raise debt as the credit squeeze in Europe and the US forces them to look to Asia to issue bonds. This month has seen a 600 per cent rise in financial bond issuance in yen-denominated paper, building on a trend since July when liquidity in the money markets began to dry up.
Yawn 1,000,000 times. You have to get to page 7... Before they tell you that $300 billion of loans have been "orphaned" so far... Versus a $65 trillion world economy. That's 0.5 percent temporarily "orphaned"... big deal. Another piece up to the standards of Cramer. It you cannot make money regardless of market direction... Than you are not much of a trader. Instead of reading garbage like this... Learn to trade a market-neutral Portfolio.