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Old 03-09-2012, 06:58 PM   #61
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Yes, this chart is indeed PE-10, which is the average PE over the past 10 years.

The current P/E ratio of the SP500 is around 16, and not 22.8 as the PE-10 shows.

If one wants cheaper stocks, there is emerging-market stock, with PE of 12 for an index (FTSE perhaps, I forgot). Also, a PIMCO money manager recently pointed out that emerging-market bonds also have better yields than US ones, yet emerging countries are not laden with debt like developed countries are.

Moreover, I find it interesting that Burton Malkiel, the author of the well-known book "A Random Walk Down Wall Street" and a buddy of John Bogle, also noted in more than one recent article or interview that emerging stocks and bonds should be good buys. As a proponent of the Efficient Market Hypothesis, albeit only in the weak sense, meaning that in the short-term the market may act irrationally (of course we know this), his stance is noteworthy.
Thanks. Do you have a link to some data showing the current PE is 16? I haven't seen that but would feel much better if that were true. This chart was the only one I could come up with.
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Old 03-09-2012, 07:27 PM   #62
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It is 15.86 on this day of 3/9/2012, according to the WSJ site here.

From the same site, the estimated forward P/E is 13.10, meaning the earnings are expected to improve down the road.

I have problems finding a historical chart, and could only locate the following one.

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Old 03-09-2012, 08:22 PM   #63
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I thought current P/E was around 14, and the trailing chart you published shows about 14. I thought it was 15 about a year ago.
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Old 03-09-2012, 08:29 PM   #64
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Your number may not be up-to-date. The S&P is up 9% year-to-date, so the P/E is up also.

Eh, I am not complaining. How about you?
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Old 03-09-2012, 08:34 PM   #65
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It is 15.86 on this day of 3/9/2012, according to the WSJ site here.

From the same site, the estimated forward P/E is 13.10, meaning the earnings are expected to improve down the road.

I have problems finding a historical chart, and could only locate the following one.

Thanks much NW. This is good news and I can see why many of you are more bullish now. It helps to have the correct chart!
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Old 03-09-2012, 08:36 PM   #66
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There is still about 3 TRILLION sitting on the sidelines.

Corporations are sitting on tons of cash, waiting for clarity on regulations and healthcare.

Experts still optimistic of a 1400 S&P by year end.

A big spike in June/Sept time frame? Nov 3 rally?
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Old 03-09-2012, 08:38 PM   #67
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I thought current P/E was around 14, and the trailing chart you published shows about 14. I thought it was 15 about a year ago.
According to S&P, LTM actual operating earnings were $94.64. At a closing price today of 1,370 that puts the trailing PE at 14.47x (Dividend yield of only 1.9%, though)
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Old 03-09-2012, 08:46 PM   #68
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Damn it! We all know about P, but people seem to not be able to agree on the E part.

I thought they fired or jailed all the culprits who concocted phony E's after the 2000 tech bubble.

Just can't trust these accountants!
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Old 03-09-2012, 08:46 PM   #69
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Your number may not be up-to-date. The S&P is up 9% year-to-date, so the P/E is up also.

Eh, I am not complaining. How about you?
Yeah - that must be the difference. Oh - I see Gone4Good brought in more data!

Although I'm still reading things like "The S&P 500 traded at 14.1 times earnings when the market hit its most recent high on March 1. That’s the lowest valuation of any 52-week market high going back to 1989." The Bull Market Turns Three. Where's the Party? - Businessweek

I assume they are talking about trailing earnings.

Well, anyway, 14 SOMETHING! That's not bad, really.

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Old 03-10-2012, 03:16 AM   #70
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Bullish?
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Old 03-10-2012, 12:16 PM   #71
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Hmmm, I am beginning to think that a lot of people have become reflexively pessimistic over the last several years. I see lots of things moving in the right direction: profits, labor market, funding conditions, etc. With the Greece exchange in the rearview mirror, perhaps some of these positive developments will occupy more of the media's attention.
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I see credit market conditions improving meaningfully as well. The investment grade market is wide open and investors are thrusting cash at such issuers. Junk spreads have been dropping to the point where it is attractive for many junk issuers to refinance or pound out new bonds. The bank loan market also seems to be easing somewhat based on a few refinancings/amendments that allow for much more borrower flexibility and often a lower cost of funds.
Well, now you've done it. That's as close to "Wheeee!!" as I've ever heard from you.

I'll be liquidating all my equities on Monday and moving to gold bullion. And shotgun shells. And MREs. And shorting the TSM... on margin.
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Old 03-10-2012, 01:17 PM   #72
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Well, now you've done it. That's as close to "Wheeee!!" as I've ever heard from you.

I'll be liquidating all my equities on Monday and moving to gold bullion. And shotgun shells. And MREs. And shorting the TSM... on margin.
Nah, I am a patient deep value bottom fisher, not a permabear. There are still plenty of hurdles, I just think that the public at large is excessively pessimistic and does not see the slow, steady improvement.

Although I did fill the 55 gallon barrel of emergency water today (mostly cause we live in a dry climate and would be hosed if the water was off for a day) and shotgun shells (my newly acquired toy is 20 gauge and I don't have any of that).
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Old 03-10-2012, 06:35 PM   #73
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Although I did fill the 55 gallon barrel of emergency water today (mostly cause we live in a dry climate and would be hosed if the water was off for a day) and shotgun shells (my newly acquired toy is 20 gauge and I don't have any of that).
Betcha never used sentences like that in NJ. At least I hope you never had to.

Looks like you've made the transition to your new culture just fine. At least you'll never have to wear the cowboy hat on Wall Street...
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Old 03-10-2012, 11:43 PM   #74
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At least you'll never have to wear the cowboy hat on Wall Street...
Ah, but I did on a regular basis prior to making my escape. I did draw the line at the big, silver belt buckle with the turquoise embedded in it.

My coworker could not understand the concept of it not being legal to hunt deer with a rifle in all of NJ and much of NY. I think it clicked when I pointed out that NJ alone has CO's population in an area 1/12 the size.
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Old 03-11-2012, 09:26 PM   #75
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My coworker could not understand the concept of it not being legal to hunt deer with a rifle in all of NJ and much of NY. I think it clicked when I pointed out that NJ alone has CO's population in an area 1/12 the size.
The last thing I want to do is let a bunch of licensed Wall Street guys shoot for the big bucks...
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Old 03-11-2012, 10:07 PM   #76
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The last thing I want to do is let a bunch of licensed Wall Street guys shoot for the big bucks...
This is a colleague here in the heartland who grew up (among other things) detassling corn and hunting pheasants in cornfields. The Wall St. guys are generally far too busy working to hunt, fish or do much of anything else.
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Old 03-11-2012, 10:11 PM   #77
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The Dow in real dollars is currently below its century-long trend midline, which has me bullish.
http://home.earthlink.net/~intellige...om-dj-infl.htm
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Old 03-12-2012, 01:14 AM   #78
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The Dow in real dollars is currently below its century-long trend midline, which has me bullish.
Fred's Intelligent Bear Site - Inflation Adjusted DJIA
Excellent chart and commentary. Thanks for posting it.

But I am at a loss about how this could make you bullish. If anything, this is a bearish chart. It does show the power of government manipulation. That is pretty much the only missing link- how long can Li'l Dr Ben keep the balls in the air?

Ha
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Old 03-12-2012, 09:06 AM   #79
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But I am at a loss about how this could make you bullish. If anything, this is a bearish chart.
I read the top chart as saying that we can expect 1.9% real price appreciation, plus a 2% dividend yield with a 50/50 shot of doing better or doing worse.

The bottom chart I look at and say "interesting correlation, but how is today anything like the 1960's and 70's?"
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Old 03-12-2012, 09:30 AM   #80
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I don't know about all that........

Yes, profits are up, but companies are sitting on a TON of cash because of restrictive regulatory environment......
Agreed on the hoarding of cash, but not entirely sure it's all due to "restrictive regulatory environment." I'm sure that's part of it, but also companies just don't have to give any increasing sales or profits to employees because the labor market is so weak. Additionally, the companies don't give a lot of it back to shareholders because of the double taxation of dividends (many investors don't want dividends for that reason, especially with "growth" companies).

Also, many companies now hoard cash as a growth strategy; in many larger companies M&A has mostly replaced R&D as a growth strategy -- most new product lines in large businesses are bought, not developed internally. And relying on M&A for growth requires regularly replenishing a mountain of cash for the next acquisition.
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