Bond fund guru predicts dow 5000 and other cheerful notes
- Thread starter andrasnm
- Start date
If the DOW got to 5,000, the average P/E ratio for DOW 30 stocks would be under 9. That's using today's earnings. So I guess he's taking into account future earnings, where the company's P/E would be higher.
The S&P has an average P/E of around 36.00 right now. So, technically speaking, it should be trading around 450 if you take into account the historical average P/E ratio for most companies. If earnings fell further, the P/E would be even more inflated and the S&P would have to fall below 400 to catch up with "historic values."
This doesn't even scratch the surface with the impending 100 trillion dollar derivative disaster that may come within the next 5 years.
aphie
The S&P has an average P/E of around 36.00 right now. So, technically speaking, it should be trading around 450 if you take into account the historical average P/E ratio for most companies. If earnings fell further, the P/E would be even more inflated and the S&P would have to fall below 400 to catch up with "historic values."
This doesn't even scratch the surface with the impending 100 trillion dollar derivative disaster that may come within the next 5 years.
aphie
Right, I agree with you...I have heard about the way they will talk down a corporations debt, then go in and buy it cheaper...Or they will bitch and moan about the hedge funds shorting corporate debt and cry foul...
I see all of this as politics as usual for the biggest market movers just like Buffet and Soros do with their typical political spin that is taken as the "word" by the masses...
Different method of analysis, same conclusion from Jim Stack (heard about him from the Fleckmeister):
http://www.investech.com/others/chart.cfm?id=327
http://www.investech.com/others/chart.cfm?id=327
Bill Gross seems to me to conclude that it is necessary to enter the market when the dividend yield is greater than 4% in order to get the average (inflation adjusted) return from the market. SSSSSSSSOOOOOOOOOO What? He bases this from 1900 and taking the average inflation adjusted return over the next 100 years. Does this mean we must give back the money we took out of the market 1999 to present because we entered when the dividend yield was grater than 4%. I'm not looking to hold 100 years, months, weeks, days or usually even 100 minutes. I'm also not just looking for the average inflation adjusted return from the market.
Babak, thanks for that interesting link.
If the market moves with even one fourth of the volatility J. Stack shows in that CHART OF THE WEEK over the next ten years I will be happy. It really doesn't matter to me personally if we see Dow 5000 or Dow 10000. Just give me volatility and liquidity and I'm a happy trader.
Most traders would probably be much more successful if they concerned themselves less with what the market might or might not do and more with how THEY could capitalize from what it is doing.
aphexcoil
I have been reading, with great interest, your posts on some recent threads concerning your quest for an improved moving average and your simulator. Please keep me posted. I have some thoughts on the moving average. When I get some time I will PM you. Good Luck
Babak, thanks for that interesting link.
If the market moves with even one fourth of the volatility J. Stack shows in that CHART OF THE WEEK over the next ten years I will be happy. It really doesn't matter to me personally if we see Dow 5000 or Dow 10000. Just give me volatility and liquidity and I'm a happy trader.
Most traders would probably be much more successful if they concerned themselves less with what the market might or might not do and more with how THEY could capitalize from what it is doing.
aphexcoil
I have been reading, with great interest, your posts on some recent threads concerning your quest for an improved moving average and your simulator. Please keep me posted. I have some thoughts on the moving average. When I get some time I will PM you. Good Luck
...
This doesn't even scratch the surface with the impending 100 trillion dollar derivative disaster that may come within the next 5 years.
aphie [/B][/QUOTE]
Hey Aphie, could you expand on the idea about the 'derivatives disaster?'
Biggest sign the worst is yet to come, a good percentage of the traders/people I talk to really believe July was the bottom.
Thanks
This doesn't even scratch the surface with the impending 100 trillion dollar derivative disaster that may come within the next 5 years.
aphie [/B][/QUOTE]
Hey Aphie, could you expand on the idea about the 'derivatives disaster?'
Biggest sign the worst is yet to come, a good percentage of the traders/people I talk to really believe July was the bottom.
Thanks
Aphie that is inaccurate about the Average Dow P/E being under 9 at 5000. Hostorical Dow P/E averages 14-17. This Dow is still running approx. 21-23%. It is this reason that prognosticators are saying the Dow is 30-34% overvalued.
And remember, we almost never see a market fall to fair value and bounce from there. There will be an overshoot most likely.
And remember, we almost never see a market fall to fair value and bounce from there. There will be an overshoot most likely.