Why is no one talking about the S&P500 P/E ratio?
- Thread starter MrDODGE
- Start date
I tend to agree with your analysis. I expect price inflation will be greater than wage inflation going forward. I expect a recovery in earnings to be largely driven by inflation and largely non-existent in constant dollars. I wouldn't want to hazard a guess re stock prices in the short run, because as we all know stock prices can get very much out of whack with reality. The Wall Street explanation, of course, is that the market anticipates. Commonly, coming out of a recession the market recovers about 30% of its losses fairly rapidly and then market recovery slows. It seems the market is anticipating an end to the recession. The market may be getting farther in front of the economy than usual in the present instance.
It seems recovery in constant dollars will be a very long process, taking years, and that in the meantime we will continue to do what we have been doing, especially since Reagan, and that is to live higher on the hog than our productivity justifies. A standard of living held up by mortgaging the future using modern economic theory. When the US credit rating falters the party will end. Who knows when that might happen?
That's a commonly stated justification. I've never seen that in print from any Fed source however. I think Scat has the real reason. It significantly understates real inflation and that, of course, saves the Treasury billions and billions in entitlements, and even more crucially, hoodwinks any foreign central bank that is foolish enough to believe the official figure. We must borrow trillions to keep our economy afloat and we want to borrow at the most favorable interest rate possible.
P.S. It has also occurred to me that "cheating" on inflation figures may be part of game played among central banks, as it is inconceivable that the Fed would not have a whole bunch of economists who are experts in the methods used to compute inflation in other economies. Perhaps our tricks are just a response to the tricks of other debtor nation's central banks. If this is what's going on, then that's going to be a high sensitivity area, and you won't be reading about it in the New York Times.
acepowerdrive
Guest
the markets are manipulated an rigged by market makers like penny stocks in the OTC BB nasdaq so earnings are irrelevant and charts too.
the manipulation is the most obvious in afterhours when their is no volume. it is so easy to raise bid when nobody is selling and raise the ask when nobody is selling vise versa. fake ask and bids in afterhours in no volume to pull the stops.
one time i did a market sell order in regular hours and market makers refused to take the order only after it dropped like 5% later in penny stocks. bid was like .15 cents and i did a market order...no takers..and then bid was .14 before the market orders took couple or minutes and multiple market orders before filled so i know this market is rigged by market makers.
the manipulation is the most obvious in afterhours when their is no volume. it is so easy to raise bid when nobody is selling and raise the ask when nobody is selling vise versa. fake ask and bids in afterhours in no volume to pull the stops.
one time i did a market sell order in regular hours and market makers refused to take the order only after it dropped like 5% later in penny stocks. bid was like .15 cents and i did a market order...no takers..and then bid was .14 before the market orders took couple or minutes and multiple market orders before filled so i know this market is rigged by market makers.
If you used this to trade off of you got your ass handed to you over the last several months.
You continue to look "behind" yourself instead of in "front" of you... Surely you do not drive your car by looking into the "rear-view" mirror!
Do you even know the difference between operating earnings and GAAP?
Even one of the biggest bears on Wall Street ( David Rosenberg, former chief economist at Merrill ) has $60 per share of operating earnings for the S&P for 2010.
With a "fair-value" P/E of 14, that puts the S&P at 840.
Operating earnings is not balooney at all. Yes its earnings before bad stuff, but guess what, bad stuff usually declines once a recession is over, so it DOES provide a good view of what is likely as the SP500 normalized earnings will be
Same thing with the core CPI, the CPI hyperinflationists were all crying about the need for hikes in 2008, yet Bernanke and the FOMC(a bunch of people usually clueless about forecasting) owned them by fading the energy and commodity move saying the core CPI was more important. Jim Rogers, I suppose, is still supporting his idea of raising rates in 2007 to defend the dollar
Same thing with the core CPI, the CPI hyperinflationists were all crying about the need for hikes in 2008, yet Bernanke and the FOMC(a bunch of people usually clueless about forecasting) owned them by fading the energy and commodity move saying the core CPI was more important. Jim Rogers, I suppose, is still supporting his idea of raising rates in 2007 to defend the dollar
Hey, y'all.... take this with a grain of salt. His thinking on this is shallow.. He's only stated "conventional... what we'd like you to believe" spew.
Landis is pointing you in the right direct. PE based off trailing earning is of little value. PE based off forward earning is a better gauge of value.
Oh really? Can be, "Make up anything you want" earnings estimates? Meh.