August 2011
January 2008
Friday, August 12, 2011
January 2008 and August 2011
There are a lot of similarities between now and January 2008. I decided to compare the two. If we really are heading into a beginning of 2008 type of environment, the dollar will be getting much weaker, gold (2011's version of crude oil) will be getting much stronger, and equities will be range bound for the next few months with a retest in a couple of months.
Subscribe to:
Post Comments (Atom)
Posts
3 comments:
Look at the S&P 500 from 1972 to 1978 and from 2003 to now, the set ups are more similiar including the Price Earnings ratio. Also similiar is Gold, CHF, Silver action also. With China now accelerating RMB appreciation rather than halting in 2008 we are about to see an Asian buyers strike begin on US T bills... bond yields are bottom here and the US will have inflation per the ugly 1970's and early 80's style once more. The upshot is people will buy real estate as hedge and equities will keep derating but prices will inflate.
The normalized price earnings ratio was much lower back in the 1970s. That equity market was much cheaper than equities now. All the use of pro-forma forward earnings is a fairly recent phenomena. You have to use real GAAP earnings, not the earnings ex one time losses (which tend to repeat!).
In the early 70's around 72' you were approx 25x then in 76 you were around 13x... you then derated as inflation took off to sub 8x. This doesn't change the fact the bonds still may be about to start a secular sell off that will force money into equities.
Post a Comment