Let Us Have Peace

1 Comment

    • ON: Wed Mar 5th 15:45 PM
      Commented on:
      The Federal Reserve, the Economy, and Stocks
      The ratio of the 5 Yr. vs. 30 Yr. Treasury yield has been a robust indicator, and it confirms Mr. Miller's optimism about future returns on present U.S. equity investments. The last time the ratio was at its present value was in mid-September 2002, which was certainly a better than average time to make actual investments in the U.S. stock market (that is, to buy a decent quality company's stock and keep it for the next 2 to 3 years). Adjusted for the Federal Reserve's Major Currency Index, the S&P 500 is up only 22% from its March 2003 value - which was the low for the last 10 years. Since its "bull" market high last May, the adjusted index has fallen almost 24%; it is now back to the level of May 2005. That would, by most reasonable standards, constitute a bear market. As the other comments confirm, very few people want the long side of the trade right now. That is itself a confirmation that we are in the range where hindsight will tell us that stocks were cheap in March 2008.
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