Back to year 2000 or worse
- Thread starter xandman
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Except we're in a COMPLETELY different economic environment than 2000 and the broader stock market, while somewhat overvalued by historical standards, isn't nearly as overvalued as 2000.
https://www.multpl.com/shiller-pe
It reminds of why those "Today's market looks just like 1929!" charts are always wrong. I don't know how many of those I've seen in the last two decades...and markets never followed the same trajectories.
https://www.multpl.com/shiller-pe
It reminds of why those "Today's market looks just like 1929!" charts are always wrong. I don't know how many of those I've seen in the last two decades...and markets never followed the same trajectories.
The graph you provide shows us easily in the top quintile over a 200 year period. It looks exactly the same to me with regards to market concentration and valuation.
If you assume valuations are completely static over time. I question that belief. I don't think we're in a new era when "valuations don't matter," but there can be structural and regime changes in the economy that affect valuations. A P/E ratio of a stock from 1900 may not mean the same thing as a P/E does in 2020... And if you compare relative yields on bonds and stocks, then stocks are a bargain.
Good points
Zero interest rates, trillions in stimulus, the Fed and government doing “anything necessary” to make sure stocks never go down.
There is zero real price discovery.
All historical charts and stats are meaningless now.
Yeah, it's been going on since the late 80s/early 90s "Greenspan Put" era, but really picked up in 2008-9. We still have occasional drops where stocks get relatively close to "fair value." The last time was the 2008-9 financial crisis and even then stocks weren't truly cheap like they were in the early 80s. But if you're on the sidelines waiting for an S&P 500 P/E ratio of 10-12, you may sit in a money market fund for the rest of your investing life. Enjoy your 0.02% returns...
are the shorts getting screwed, as it were, by the one-way manipulations of the ppt?
This is really nice well put thought. You made a point.