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Re: S&P500 PE
Old 11-29-2006, 12:27 PM   #21
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Re: S&P500 PE

Originally Posted by MasterBlaster

Here's a link to 36 (or so) stock market indicators:
Great page of graphs. I suppose there is always conflicting information and "you pays your money and make your choice". Or I, like most employeed people, just DCA for the length of the career and withdraw 4% a year in retirement and hope it all works out.
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Re: S&P500 PE
Old 11-29-2006, 08:15 PM   #22
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Re: S&P500 PE

Originally Posted by justin
When PE's are around the level they are now, it doesn't really tell you much. When they dip to 5 and earnings growth going forward will be flat or better, then it is a good time to buy. When PE's go up to 25, 30, 35, the market gets more risky - ie you are paying a decent sized speculative premium.
Unfortunately, the horrible truth is that big market up moves usually happen when PEs are high -- 20+. The PEs are usually high when the earnings fall and stocks crash. Earnings start to improve but the PEs are still high when the market responds with a killer rally.

Rallys when the PEs are high can keep on going because higher earnings keep feeding the fire. When earnings fall off the end comes. It is usually drawn out and painful. Eventually, the PEs fall to much lower levels.
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Re: S&P500 PE
Old 11-29-2006, 08:59 PM   #23
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Re: S&P500 PE

Originally Posted by MasterBlaster
Oh why just use the S&P500 PE indicator when you can use 36 separate indicators...

Here's a link to 36 (or so) stock market indicators:
Hey, great resource! Thanks for the link!

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Re: S&P500 PE
Old 11-30-2006, 07:19 AM   #24
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Re: S&P500 PE

Great link!

Some of those indicators don't seem to offer any long term indication whatsoever.

Notice: The yield curve spread doesn't look good.

The S&P 500 Dividend Yield vs. Treasury-Bill Yield, neither.
But the 30 Yr. T-Bond Yield Minus Dividend Yield is OK does it mean the market is a good long term value but we will have a correction?
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