Reflections's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/267214/comments http://seekingalpha.com/article/174492-the-twenty-year-stock-bubble-is-still-inflated?source=feed#comment-769008 769008

On Nov 20 09:44 AM David Van Knapp wrote:

> Great article, full of facts. Good job. Reasonable interpretations
> of those facts too.
>
> But not the only reasonable interpretations, as the comments already
> posted show. Here are just a few of the questions that went through
> my mind as I read the article and the comments:
> (1) Has the red line (the all-time average) been correctly calculated?
> If I were just eyeballing that chart, I would have put the average
> at around 75-80%, not 60%.
> (2) What is the meaning of the ratio of market capitalization to
> GDP? I understand the mathematical relationship, but what does it
> mean? Should we expect a consistent relationship between the two
> over 100 years, given all the things that change: wars, peace, interest
> rates, the completion of the change from an agrarian society to an
> industrial one, and then from an industrial economy to a service
> economy, technological changes, the rise in proportion of consumer
> spending as a percentage of GDP, etc?
> (3) How would the graph change if it were in real rather than nominal
> terms?
> (4) What if you looked at the graph like a stock chart and simply
> drew a trendline rather than a flat historical average line? It would
> point up and to the right. What does that mean? Would you expect
> reversion to the trend line rather than reversion to the flat-average
> line?
> (5) The ratio has been above 100% since about 1990, or about 20 years.
> Has everybody been totally irrational for 20 years? I know, the market
> can remain irrational longer than you can remain solvent (ha ha),
> but really, have we all been nuts for this long? Or perhaps have
> productivity gains and other factors led to a situation where we
> ought to expect that market capitalization should be higher than
> GDP, that it makes sense?
>
> Again, congratulations on a thought-provoking article based on facts
> and reasonable analysis. I always give those a cheer when I see them
> on SA, because lots of articles here don't have one or both qualitites.]]> Fri, 20 Nov 2009 11:03:02 -0500

On Nov 20 09:44 AM David Van Knapp wrote:

> Great article, full of facts. Good job. Reasonable interpretations
> of those facts too.
>
> But not the only reasonable interpretations, as the comments already
> posted show. Here are just a few of the questions that went through
> my mind as I read the article and the comments:
> (1) Has the red line (the all-time average) been correctly calculated?
> If I were just eyeballing that chart, I would have put the average
> at around 75-80%, not 60%.
> (2) What is the meaning of the ratio of market capitalization to
> GDP? I understand the mathematical relationship, but what does it
> mean? Should we expect a consistent relationship between the two
> over 100 years, given all the things that change: wars, peace, interest
> rates, the completion of the change from an agrarian society to an
> industrial one, and then from an industrial economy to a service
> economy, technological changes, the rise in proportion of consumer
> spending as a percentage of GDP, etc?
> (3) How would the graph change if it were in real rather than nominal
> terms?
> (4) What if you looked at the graph like a stock chart and simply
> drew a trendline rather than a flat historical average line? It would
> point up and to the right. What does that mean? Would you expect
> reversion to the trend line rather than reversion to the flat-average
> line?
> (5) The ratio has been above 100% since about 1990, or about 20 years.
> Has everybody been totally irrational for 20 years? I know, the market
> can remain irrational longer than you can remain solvent (ha ha),
> but really, have we all been nuts for this long? Or perhaps have
> productivity gains and other factors led to a situation where we
> ought to expect that market capitalization should be higher than
> GDP, that it makes sense?
>
> Again, congratulations on a thought-provoking article based on facts
> and reasonable analysis. I always give those a cheer when I see them
> on SA, because lots of articles here don't have one or both qualitites.]]> http://seekingalpha.com/article/99074-global-coordinated-rate-cut-nice-try-but-the-party-is-over?source=feed#comment-277120 277120 Wed, 08 Oct 2008 15:07:49 -0400 http://seekingalpha.com/article/97490-why-friday-came-early?source=feed#comment-265669 265669 Fri, 26 Sep 2008 07:52:46 -0400 http://seekingalpha.com/article/97490-why-friday-came-early?source=feed#comment-265664 265664 Fri, 26 Sep 2008 07:46:45 -0400 http://seekingalpha.com/article/96704-bondholders-are-unjustified-big-winners-in-treasury-plan-hussman?source=feed#comment-261701 261701 Mon, 22 Sep 2008 13:52:08 -0400 http://seekingalpha.com/article/96730-goldman-and-morgan-as-bank-holding-companies?source=feed#comment-261672 261672 Mon, 22 Sep 2008 13:37:08 -0400