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  • UBS Optimistic About S&Ps in 2009 - On Both Sides of the Border [View article]
    Unfortunately these "expert analysts" can't see farther back than the past few decades and will be the cause of many people losing most of what they have left.

    The CURRENT PE ratio of the S&P 500 is in the high teens versus the historic average of 14. Book value is also higher than the historic average by about the same percentage and if one looks at the long term trend of the stock market one sees that we are still above "fair value". IN a secular bear market we should expect the market to drop significantly below fair value (somewhere around 6,000 on the DJIA) in compensation for the excesses built into the market over the past several decades.

    As well, we have a terrible looking demographic change with the baby boomers moving into their retirement years. They will be taking more and more out of the market, generating less and less income and expecting more and more from the government.

    The Dow should easily drop to the 3,000 range and I expect it to stay well below its fair value for a decade or two.

    --Fred Voetsch
    Dec 05 11:37 am |Rating: +1 -1 |Link to Comment
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