Gone4Good
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Sep 9, 2005
- Messages
- 5,381
I know Bill is a bond guy who is prone to talk his book. But he usually backs up what he says with an understandable logic. Here he seems to miss something pretty important in my view.
PIMCO - IO Dow 5000 Gross Dec 08
His argument boils down to the notion that although traditional equity valuation measures, like P/E and the Q ratio, suggest stocks are cheap, they really aren't because we are entering into a new world of less leverage, higher taxes and higher regulation. But equities aren't just cheap when compared with the more favorable regulatory and tax environments of the late 90's, but also when compared against many periods going back over 100 years (as evidenced by the charts he provides). Is his argument that we are entering a period of taxation and regulation unlike anything ever seen before, such that traditional valuation metrics lose their meaning? Seems a bit extreme to me.
PIMCO - IO Dow 5000 Gross Dec 08
His argument boils down to the notion that although traditional equity valuation measures, like P/E and the Q ratio, suggest stocks are cheap, they really aren't because we are entering into a new world of less leverage, higher taxes and higher regulation. But equities aren't just cheap when compared with the more favorable regulatory and tax environments of the late 90's, but also when compared against many periods going back over 100 years (as evidenced by the charts he provides). Is his argument that we are entering a period of taxation and regulation unlike anything ever seen before, such that traditional valuation metrics lose their meaning? Seems a bit extreme to me.