They're going to drop harder than Milli Vanilli's career. It's not a matter of if, it's a matter of when. The only caveat is if we experience sustained deflation. I doubt this will happen with helicopter Ben at the helm. This article provides the info.
Also, I was wrong a month ago on two counts.
One, I was wrong that oil would fall to $40. It actually fell below that amount.
Two, I was wrong when I wrote that the market rally above 8,000 would be temporary. It seems to be stable for the time, and based on the huge amount of money flowing into Treasuries, it may actually be undervalued despite the CAPE figures. I wonder if CAPE is wrong; that is, if the supply of capital has so increased in the last few decades that the required return on equity has fallen, thus allowing for stable and higher P/E ratios across the board. In this case, a simple mean reversion comparison over the last century would be inaccurate since it would not account for the possibility of a newly higher average P/E.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment