Posts filed under “Technical Analysis”

P/E vs S&P 500 (50 Years)

As promised, today brings us to the 4th in our series of charts:

P/E vs S&P500
click for larger chart


courtesy of Mike Panzner, Rabo Securities

>

I’ll get into the significance of what this means to the markets later, but for now, note where the P/E is over the median, and its impact on market performance.

Stocks, while not terribly expensive, can not be called cheap by historical measures. An even more discouraging mesure on this comes from Clifford Asness of AQR Capital Management (via Mark Hulbert).  He calculated the P/E ratios for the entire market for the 1871-2003 period at ~11. That implies stocks are even less cheap (or more expensive) than the past 50 years implies.

Regardless of whether you take the 50 year or the 132 year perspective, the theory of Reversion to the Mean implies that stocks are likely to become cheaper so as P/Es revert. And one shouldn not expect the market to stop at fair value, as we have seen, the tendency is to overshoot on both sides.

>

Our 3 prior Charts:

Category: Earnings, Markets, Psychology, Technical Analysis

2 Studies on the Flattening Yield Curve

Category: Federal Reserve, Fixed Income/Interest Rates, Inflation, Technical Analysis

Alaska is Melting . . .

It seems that the melting polar ice is becoming more of a concern to Alaskans than those of us in the lower 48. click for larger graphic courtesy of  Anchorage Daily News > Thank goodness there’s no Global Warming — imagine how much more of Alaska would be melting if there was! > See also:…Read More

Category: Science, Technical Analysis, UnScience

100 Year Dow Jones Industrials Chart

Have a look at this 100 year (actually, 105-Year) chart. I colored each “Market” appropriately — Green for Bull, and Red for Bear — to more clearly show what happens. Bull markets get ahead of themselves. At their ends, they tend towards excesses that take a very long while to recover from. When a long…Read More

Category: Markets, Psychology, Technical Analysis

4 Year Presidential Cycle

This is the first of 4 charts I plan on revealing this week. Each one will hopefully shed some insight into what we may expect in 2006. This chart shows what is known as the 4 year or Presidential Cycle. The theory behind this is that U.S. markets have a tendency to make a high…Read More

Category: Markets, Technical Analysis

Inverted Yield Curve: Its different this time (not)

Category: Federal Reserve, Fixed Income/Interest Rates, Inflation, Technical Analysis

Activity Afoot in Rove Indictment Futures

Category: Politics, Technical Analysis

Global Weather Volatility is a Strong Buy (Short UnScience)

Category: Science, Technical Analysis, UnScience

Gold Yearly Data Analysis

Category: Commodities, Inflation, Technical Analysis

Impossible Returns? Hardly . . .

Category: Hedge Funds, Investing, Technical Analysis