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John Lounsbury
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John Lounsbury, Managing Editor and Co-founder of Global Economic Intersection, provides comprehensive financial planning and investment advisory services to a small number of families on a fee only basis. He has a background which includes 34 years with a major international corporation, 25... More
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John B Lounsbury CFP
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Global Economic Intersection
  • This Time Is Different? 4 comments
    Oct 27, 2012 10:00 PM | about stocks: SPY

    The question is prompted by a graph from WWW.chartoftheday.com:

    I have annotated the graph to make sure you see the pattern that causes me to ask the title question:

    I have used orange for the last down trend line because it won't become red until (and if) it completes the journey to a PE near 8.

    If the symmetry of the two previous cycles is repeated that would happen between 2020 and 2025.

    But this time could be different.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: price-earnings, PE ratio Stocks: SPY
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Comments (4)
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  • Stilldazed
    , contributor
    Comments (2113) | Send Message
     
    Hi John,
    Thanks for the historical graph. By looking at the past peaks and drops, it looks as though we are due for a very nasty plunge very soon followed by a small bounce and another plunge. Kind of like when your hands are full and your feet get tangled and you start to fall toward that concrete, all you can think is, "this is gonna hurt."
    28 Oct 2012, 05:26 AM Reply Like
  • duster
    , contributor
    Comments (103) | Send Message
     
    Would you also think then that with a pe of 8 that the yields would be approx double of today? If a pe of 8 or less would result, then what might be the driver? Another place to put ones monies where the return would be seemed safer and or higher, perhaps CDs? A result of high inflation from the money printing now in full swing? Perhaps taxes, or perhaps the baby boom retiring without enough money and needing to raid their only asset that was easily sellable? Thanks for the mental exercise.
    28 Oct 2012, 07:57 AM Reply Like
  • Cliff Wachtel
    , contributor
    Comments (1778) | Send Message
     
    an important reminder to those tempted to chase yields in stocks, stated with elegant simplicity
    28 Oct 2012, 03:12 PM Reply Like
  • John Lounsbury
    , contributor
    Comments (3973) | Send Message
     
    Author’s reply » Thanks for commenting.

     

    I am planning to do some hypothetical projections to "flesh out" the variables to be thinking about.
    28 Oct 2012, 11:41 PM Reply Like
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