11 replies to this topic

[ogm]

OGM, based on your chart (link), valuations are the same as 1973 (before huge decline) or 1995 (before huge run up). Any statiustical analysis behind this one?

And every time people justify their short term views based on long term valuations, the market does something unexpected. Do you know what unexpected is right now? I do. Going nowhere in a volatile manner.

Denleo

As I said, scepticism abounds

Seriously though... the only point of that link is to show that the market isn't expensive by historical measures. Just as I said.

I think this is a stockpickers market. I think quite a few companies will do very well, but indexes will be probably stuck in a wide range. with some upward bias. I couldn't care less about commodities for example. And they were a big drvier of the bull market. I don't see that continuing. But many large and mid size companies that are benefeting from global growth will do great. Domestic retailers on the other hand won't do that great, probably.

Plus there are foreign companies trading on the US markets. Those are worth a look. foreign telecoms for example. Telecoms are utilities of the modern world as someone said. AMX or TKC for example.. plenty of growth there. they are cash cows. Have you seen how VIP did over the years , the Russian telecom ? What bear market where ?... Even domestic telecoms. T and VZ.. charts look great, balance sheets improved, profits rolling in, and try to imagine our world without their services. Just an example of stuff to buy, IMO.

Basicaly, now that the market has finaly calmed down, and realized that 0.7%-1% defaults on subprime isn't such a huge of a problem... we can move on.

Beware this... watch the corporate debt. If economy slows down and corporate debt starts defaulting.. thats when there will be a world of pain.

So far this isn't happening.

As a matter of fact ABX-BBB stuff bounced yesterday after the Fed. JPM buying assets of bankrupt hedgefunds, and CFC picking up assets from failed competitors. The world is moving on. Big players showing signs of bottoming.. the world is moving on.

Edited by ogm, 08 August 2007 - 05:54 AM.

[ogm]

Also isn't 70s the time when interest rates went to the moon while oil was flying? We're not exactly in comporable environment. Interest rates still historicaly low. And corporate profits are high and growing. Take a look at historical p/e chart.

in 70s before the decline the S&P P/E was pushing the upper band. And then profits imploded.

Now we're not pushing the upper band, and profits aren't imploding. And interest rates aren't in 15% range.

http://www.decisionp...harts/SPPE.html

So I don't think 70s is a good comparison here.

That said there of course remains a huge risk of mass global defaults on debt, if US debt starts collapsing.
There are some worrisome numbers that indicate the record issuance of the past few years. In municipals, treasuries, corporates and so on... The counterwieght is huge secular growth in global economy.

People in the world want to live just as good as people live in the US, and use all the same technologies and services, and are willing to work for less.

So the general trend IMO will be.. weak/sluggish growth in the US and global boom elsewhere.

Will that global boom help US pull out of debt ? Question of the century.

Edited by ogm, 08 August 2007 - 06:17 AM.