http://online.wsj.com/public/article_print/SB120649226977964203.html some forecasts indicates there is another decade to be lost. a optimistic $136 earnings per share for the S&P by 2016 with a PE of 10x(to reflect an inflationary enviroment) will return -0.3% annualized before dividends
I really liked Ed Easterling's work over at Crestmont research in this area. The way he debunked ibbotson was really top-notch. I suspect this gets more attention as time goes on (and we have progressively worse returns in equities for a period of time which makes people eager for alternative explanations!)
QQQQ price change in 9 years: March 1999 = $52.50 March 2008 = $43.50 Investment growth in 9 years = -15%
To be honest, I don't think we will ever see the NASQUACK Make a new high in our lifetime. The DOW very well could be headed for 7400 over the next 3 years. I am nervous because if housing doesn't make a turnaround here soon, all the banks are going to be in major trouble. They are leveraged to the hilt and each % down in the housing market is costing them 10x that much in losses. Another 20 percent decline in housing would spell GREAT DEPRESSION.
SP in 2016 will earn a little over $90 a share at about 23x P/E, and therefore will be a little higher than 2068. Adjusted for inflation, I have no idea. But my guess is that in real $s it will be closer to 1800 to 1900. nitro
I hope you realize that this would be the first time in history the SP peaked over 20 PE, contracted slightly then expanded PE again. this cycles bottom on PE of 10 not 16 and it takes time to get there, PE expansion has never happened in history with a bottom 16 and dividend yield of less than 2%, it doesnt mean it cant happen but I just dont see the fundamentals there. greenspan in on the record forecasting inflation of 4.5% for the next 20 years and a ten year note at 8% and hes supposed to be the optimist, that surely doesnt support PE expansion
Nikkei index price change past 18 years: January 1990 = 39000 March 2008 = 13000 Investment growth in 18 years = -67%
Im wrong on the 'contracted slightly'(pe came down from 30ish), but I dont see how an overvalued top makes the case for an overvalued bottom