Capitulation? You must be joking!
BOJsDEC7th
is the best bet "long term until death" as they instruct you to marry into the
market longer than you would a wife, remember what real capitulation is...:
nobody says "buy" including the perma bulls, and the Clinton Crash of
capitulation is 22% in a single day. I don't see the dow losing 2,000 points
today. This is not capitulation. Buying dips is just catching falling knives,
and shorting all rallies/upticks makes one's wallet fatter by every Friday.
This is a slow downtrend and a long drawn out bear market to NASDAQ and dow
p/e's of 14 (today it is a ridiculous 155). All rallies are sucker/bear market
rallies. The bulls will spend precious cash on worthless paper until they have
no cash left. On that day the bottom will fall out.
1987 was 22% That was a capitulation. Today is no bottom or capitulation, it
is just another day in the life of the Bubba Bear.
MJL
>p/e's of 14 (today it is a ridiculous 155).
By the by, where do you get current Naz PE?
--
The opinions expressed above may not even be mine.
BOJsDEC7th
yesterday to get a better in depth explanation of the historic relationship and
what we have now.
704set
nobody got in at the bottom. They didn't believe the rallies.
--
704set
BOJsDEC7th wrote in message
<20010314150808...@ng-xa1.aol.com>...
EAnde28337
>yesterday to get a better in depth explanation of the historic relationship
>and
>what we have now.
>
I didnt read it, so tell me, why is it given that what went on historically is
right? (other than the fact that it looks right now)
BOJsDEC7th
>I didnt read it, so tell me, why is it given that what went on historically
>is
>right? (other than the fact that it looks right now)
It will probably be worse, given that this is so unprecedented a bubble. We
have never had one so large.
EAnde28337
>the magic number. Two very different questions.
Exactly, there is a somewhat simple answer to the question of why historical
pe's matter and I'm always amazed that the people who bandy them about can't
say why they matter.
Once you know why they matter, one can move on to the question not so much of
if they should matter but rather how they should be used.
Take stock xyz trading at 200 times earnings, that number in and of itself just
doesn't tell me a whole lot. The bias would be against buying it except for a
short term trade, but by the same token the bias isn't necessarily in favor of
selling it.
This stuff isn't rocket science but it is a little more involved than basing
everything on one ratio above all others
BOJsDEC7th
>This stuff isn't rocket science but it is a little more involved than basing
>everything on one ratio above all others
I assume you trust the 24 year old anal-ists and their future estimates of tech
earnings more than historical trends of human nature? lol
EAnde28337
>tech
>earnings more than historical trends of human nature? lol
>
No, but I also don't put much stock in people who can't seem to grasp that
there are fundamental differences between the economy of today and the economy
of 100 years ago, you know the people who usually go short near the bottom.
BOJsDEC7th
Oh, but sir, I've been a very public short here since the day of Al Gore's ugly
kiss. Guess historical data works better than the 24 year old anal-ists?
EAnde28337
>have never had one so large.
>
In 1987 stock losses amounted to about 20% of gdp, today we've lost around 40%
of gdp so it already is worse
but you ducked the question, which is actually a relatively serious one, why
should I, an educated man, immediately use the historical standard as the
default position?
MJL
>should I, an educated man, immediately use the historical standard as the
>default position?
Something about those not learning from history are doomed to repeat it.
Tech really did not change the fundamentals. Business plans matter, profits
matter, financials matter...history is a good guide when judging market manias.
The Michael
EAnde28337 wrote in message
<20010315080856...@ng-fc1.aol.com>...
>In 1987 stock losses amounted to about 20% of gdp, today
we've lost around 40%
>of gdp so it already is worse
>but you ducked the question, which is actually a relatively
serious one, why
>should I, an educated man, immediately use the historical
standard as the
>default position?
Educated men don't usually come to this NG to ask what
position they should take and why they should take it.
EAnde28337
>matter, financials matter...history is a good guide when judging market
>manias.
who said they didn't,
the question stands, the average price earnings ratio on the whatever index is
whatever historically, what makes that the magic number? and for that matter
what historical period do you want to use, the entire period? how about the
last 20 years instead which would probably give you a different yardstick to
look at
after the market crash of 1929 for quite some time, many people refused to
invest in stocks, even in stocks that paid a higher dividend than the local
bank, rather than get say 4% in a company like dupont in dividends they chose
2% in a passbook account (or whatever) , should that period of irrational fear
be used as the standard to judge all others?
how about the 70's, I would guess there were more than a few people complaining
about valuations yet that was when buffet did most (or a large part) of his
investing that resulted in his fortune
if you want to say that the historical pe on the nasdaq is 15 therefore the
nasdaq should not trade above 15, thats fine but please have something to back
up the assertion other than it's always been 15,
I would say that historically people have overestimated the risk premium in
stocks and as a result have actually not reflected their true value. for that
matter, what about tax policy and it's affects?
the point is that pe's are never too low for the bears and never too high for
the bulls,
the only lesson to be learned here is that people are so hell bent on being
afraid, they seem to miss the larger picture which aint that bad overall. it's
like that movie, the matrix
MJL
>is
>whatever historically, what makes that the magic number?
Fear probably. Are you asking why it is the magic number of IF it should be
the magic number. Two very different questions.
In any case there should be a YGBFKM (you gotta be fucking kidding me) level PE
and the nas saw that and sailed right past it. As for individual estimations
on the market they are useless, no worse than useless because they are often
self-serving and intentionally misleading. Historical norms merely provide
some reasonably objective guidance of how far ahead of itself the market got.
Generally an INVESTOR will not care about PE until it reaches the YGBFKM level.
I think if you have a good tech stock in mind and want to buy it for the long
term then now is as good a time as any. I would no longer put the naz in
clearly YGBFKM territory
BOJsDEC7th
>I would say that historically people have overestimated the risk premium in
>stocks and as a result have actually not reflected their true value.
OK buddy, then I put you in the crowd who believes "it is different this time".
lol
Human nature does not change. Hell, this market even follows the pattern
dating back to the south sea bubble a few hundred years ago.
EAnde28337
>position they should take and why they should take it.
>
translation I don't know why