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So who's right?
Old 04-26-2010, 07:35 AM   #1
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So who's right?

US Stocks Cheapest since 1990

This guy . . .

Quote:
The benchmark gauge for American equities is trading at 14.2 times forecasts for its companies’ profits, lower than any time since 1990 . . . Income is beating analysts’ estimates by 22 percent in the first quarter . . . “The stock market is incredibly inexpensive,” said Kevin Rendino, who manages $11 billion in Plainsboro, New Jersey, for BlackRock, the world’s largest asset manager. “I don’t know how the bears can argue against how well corporations are doing.”
Or this guy . . .

Quote:
David Rosenberg, chief economist of Gluskin Sheff & Associates Inc., says U.S. stocks are poised for losses because they’ve become too expensive. The S&P 500 is valued at 22.1 times annual earnings from the past 10 years, according to inflation-adjusted data since 1871 tracked by Yale University Professor Robert Shiller.
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Old 04-26-2010, 08:55 AM   #2
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They both are right. If you look at prediction metrics you will find that they often conflict with one another. take each metric with an enlightened grain of salt. Also keep in mind what we have been through in the last year or two and the last decade. Some believe that recent history has distorted some of these metrics.

If you are into predictor gauges here is a link to quite a few:

Market Gauge by Dataview, LLC

click on a chart tab to get the graph of each metric
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Old 04-26-2010, 09:18 AM   #3
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Quote:
Originally Posted by MasterBlaster View Post
If you are into predictor gauges here is a link to quite a few:

Market Gauge by Dataview, LLC

click on a chart tab to get the graph of each metric
As of Market Close: August 14, 2002 ?

From the Help Menu:
Quote:
How often is Market Gauge updated? Market Gauge shows the results of the last full day of trading, so if today were Wednesday, the state of the Market as of the end of Tuesdays trading would be shown.
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Old 04-26-2010, 09:19 AM   #4
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Originally Posted by RonBoyd View Post
As of Market Close: August 14, 2002 ?
As I recall, that was a rather good time to buy...
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Old 04-26-2010, 09:23 AM   #5
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At some point, both of them will be right, although not at the same time......
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Old 04-26-2010, 09:32 AM   #6
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Quote:
Originally Posted by RonBoyd View Post
As of Market Close: August 14, 2002 ?

From the Help Menu:

Sorry - I guess my link was hopelessly out of date.

lets try this one (it should be current):

http://tal.marketgauge.com/dvmgpro/G...daysGauges.asp

Nonetheless one can see that market prediction gauges are often conflicting and that one should NOT blindly follow a single market predictor.
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Old 04-26-2010, 11:04 AM   #7
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The past 10 years have been rather exceptional, so I'm not surprised earnings would look low averaging over the last 10 years. On the other hand, who can believe predictions of earnings a year from now?

Given that we're still down quite a bit, I'm on the optimistic side still, though I'm currently adding to my cash for expenses.
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Old 04-26-2010, 04:03 PM   #8
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One's forward looking the other is backward looking.
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Old 04-26-2010, 04:42 PM   #9
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Quote:
Originally Posted by Gone4Good View Post
US Stocks Cheapest since 1990

This guy . . .

"The benchmark gauge for American equities is trading at 14.2 times forecasts for its companies’ profits, lower than any time since 1990 ... “The stock market is incredibly inexpensive,” "

This guy got it wrong: in September 2007, S&P500 was at 13.7 times 2008 forecasts for the companies earnings, and look what happened...

(based on 2008 forecast data from The Tech Farm: Sector S&P 500 PE Ratios, and Earnings Growth)


Quote:

Or this guy . . .

"says U.S. stocks are poised for losses because they’ve become too expensive. The S&P 500 is valued at 22.1 times annual earnings from the past 10 years"
This guy also got it wrong: in September 2002, S&P500 was valued 22.36 times annual earning from the prior 10 years (PE10), and look what happened...

(based on PE10 data from www.econ.yale.edu/~shiller/data/ie_data.xls)

Clearly, both guys should reverse their opinions, and then the world would be in order.
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Old 04-26-2010, 05:45 PM   #10
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Originally Posted by smjsl View Post
This guy got it wrong: in September 2007, . ..

This guy also got it wrong: in September 2002,
Nice. I like it.

So who's wrong now?
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Old 04-28-2010, 05:37 AM   #11
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Well they keep greecing up the "wall of worry"... Hopefully they save some for the printing presses...
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