Jan

12

Brett is always endlessly speaking of market cycles, I found this to be an interesting take and an analysis I had not thought about before:

"During the first quarter of 2000, the dotcom bubble famously peaked after setting a new record high for corporate equity valuations. Today, we haven't quite matched that record in terms of equities, though, by some measures, we are very close. And when you look at corporate valuations more comprehensively, including both debt and equity, we actually have now matched that prior period. The chart below shows the value of nonfinancial corporate debt and equity relative to nonfinancial gross value added (data provided by FRED), essentially a measure of enterprise value-to-sales. I'll let you come to your own conclusion about what this might mean going forward."

Dylan Distasio writes: 

This is interesting, thanks. However, shouldn't duration and average interest rates on the debt have some relevance to using it to calculate valuations? I'm asking the question, not necessarily drawing that conclusion. Just wondering if my betters have an opinion on the linked chart.

Larry Williams writes:

So what if we have matched the all-time high valuations of 2008? Provided that the all-time valuation high was in 1960 8C would've stopped investing in 1995?
 
I am convinced there is one and only one thing that really causes bear markets– recessions. That's the key, certainly not technical analysis.

Happy bullish trails to all.


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  1. astro the dog on January 12, 2017 2:01 pm

    Bear Markets are cause by one thing, the lack of buying.

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