pelican

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  • 4 Ways to Tell if This Bear Market Has Really Bottomed
    I have been reading a lot about how cheap this market is but I can't completely understand why. Some focus on current p/e, for example, but to me that's meaningless. Forward earnings are what matters. Some talk about next earnings on the S&P 500 coming in around $80 but that's a "bottom up" number, a figure most agree is was too optimistic. In recent weeks, a few of the major brokerage houses have dropped their "top down" earnings projections for the S&P 500 to $53, or $55, or $65. That suggests a forward p/e of 13-17x. Reasonable, but not cheap. And my suspicion is that forecasts will continue to come down. We aren't even in 2009 yet! So what's this talk about stocks being so cheap? You could extrapolate and look a few years down the road and, yes, stocks look cheap but that exercise requires a certain amount of faith and the market doesn't discount that far ahead. Personally, I'm using a 15x multiple and based on forward earnings for 2009 and 2010. Therefore, I see the market has being pretty closed to fair value.

    A few other thoughts. If November 20th is the bottom, it would be the first time I can recall that so many people have identified the bottom right have it has occured. Also, if this is the worst economic situation we've faced since the Great Despression, does it make sense this bear market lasted only 13 months (top to bottom)? The average is 10 months and severe bear markets take 18-24 months. I have trouble reconciling that.









    Dec 10 08:58 am |Rating: +6 -1 |Link to Comment |View article
  • Low Rates, Big Problems
    I agree with your article. I can't understand why some people who obviously bought homes to get wealthy are being rewarded at the expense of those who were more prudent. And does saving a few hundred dollars a month on your mortgage make much difference to those who are already ten - if not hundreds - of thousands of dollars underwater? So someone bought a house for $500K three years ago that's worth $300K today. If prices stopped falling tomorrow and started to increase at 3% a year or the rate of inflation, it would take 17 years to get back to that $500K mark. First, I'm not sure that person wouldn't still walk away. Second, I'm not sure who would qualify under this new plan since the details are not all there. Finally, the market will eventually make adjustments once the artificial rate is removed, thus only slowing the inevitable, as Peter said.


    Dec 07 06:56 am |Rating: +4 0 |Link to Comment |View article
  • Stocks Are Not Too Cheap
    I would have liked to see some metrics to back up your opinion. What is the foward p/e on the S&P 500? At what level do you think the p/e is reasonable?
    Oct 26 10:15 am |Rating: 0 0 |Link to Comment |View article
  • If You Think the Dow Did Well Today, You're Wrong
    Thanks for pointing how wrong I was. My portfolio gained 4% today and I thought I should be happy!

    For ALL the reasons others have posted, this article shows you cannot be objective. You've lost credibility.
    Sep 20 10:48 am |Rating: 0 0 |Link to Comment |View article

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