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But it's a matter of earnings and PEs... SP earnings were $46 in November (12-month trailing), will be lower after this quarter.. maybe even $30... or will hit that later in the year. 10x PE x $30 = SP of 300. Currently the PE is 20-ish... hardly cheap.
If the markets stay down, investors will get more discouraged and PEs likely to erode.
I think SP 300 is easily reasonable.. .maybe significantly lower, too.
I thought on a prominently TA board like this, P/E ratio based projections are a no-no?
Now you are entering the "Funnymentals" zone, my man.
Didn't say "I made trades based upon PEs"... just saying the market is not currently cheap and could reasonably go much lower.... not 300 on this leg, however.... at THE bottom... 2014-2016 maybe?
Would the market be cheap if the P/E were 2 but inflation was 10% instead of 0%?
Just askin'.
Think about normalizing P/E relative to inflation and interest rates and you may want to ditch the big screw up banks from the calculations.
Mark
Lot of variables here.
At the '82, low PE was about 8x. But T-Bonds were about 15% yield, money markets about 18%.... there was some other desirable place for people to put their money. This time we don't have that.
On the other hand, '80-'82, was a recession.... basically controlled by the Fed and relatively short.
This time, however, I think we're facing something entirely different.... "credit exhaustion". The economy and the markets could spend a LONG time in the dumper... and if they do, people will get more discouraged with their stock losses... selling may (should?) take PE <10x.
At this point in the process, I believe nearly everyone is still viewing the current situation "through the eyes of recession parameters"... and thinking "this is about enough on the downside".
I think they are in denial and wrong.
We'll see.
