kevinm

Fundamental Valuation: How Low Could We Go?

Is 2008 exactly like 1982? Or the early 70s?

There were no PCs then. No internet. Communism had not yet fallen, and we were in a Cold War. No China and India opening up and growing rapidly. Is medical technology better now or then? Were there cell phones? Automatic garage door openers?

Yes, things are ugly now, and will be for a while. I am no bullish polyanna. But there is no reason that we have to go to 400 on the S & P just because PEs used to be 8 or that stocks once sold for book value.

It is also true that things happen much faster now than then. The 40% drop we have seen in the past year might have taken five or ten years back then. For that matter, every day presents as many trading opportunities as you would typically get in a month, or three, or a year!

Gloom and doom does no one any good, especially after already taking a 40% hit. And black box magic formulas are more what has gotten the market INTO this trouble than what will help get out.