NoFate

Why I'm Not 100% Convinced That We've Entered A Bear Market

1) A 17 or 18 PE is historically high for the US. Instead of 10 year, which averages in your 45 PE in the tech bubble, why don't you go back 50 years?

2) PEs are still estimated using forward view ...both Q3 and Q4 earnings growth were cut substantially ...as I am sure 2008 will be as well.

3) Emerging markets have higher earnings growth expectations because their GDP growth is MUCH higher than developed countries. BRIC probably averages 8-10% GDP growth versus the US growth of 1-2% on average. I think EM are also over valued, but not at much as the S&P.

If you are still a bull it is because you choose to be. As they say, "Sold to YOU!"

Friday's Selloff: Expecting More, But Then Recovery

And just to clarify ...I'm just making the argument that earnings estimates for Q4 and beyond are way too high.

This means P/Es should be higher than they are ...and as prices adjust to lower earnings estimates, I think we will see more days like Friday.

Friday's Selloff: Expecting More, But Then Recovery

I think Citi kicked off the ugliness last Monday, but Friday's sell-off was no longer contained to financial or housing sectors.

In Barry's words regarding the Friday sell-off, "3M (MMM), Honeywell (HON) and Caterpillar (CAT) were leading the charge lower."

The paradigm has shifted ...the issues appear to have spilled over into the broader economy.

Friday's Selloff: Expecting More, But Then Recovery

Roger, I respect your insight as well. And I think your emerging market comments are right on.

I think the sell-off Friday goes well beyond liquidity though. The Q3 numbers are pointing to the fact that Q4 will not have 10% profit growth as predicted. This could ultimately kill PEs and take down the market.