Caroline "Dow 36,000" Baum?
Caroline Baum noticed in her most recent column Greenspan's recent reversion to his Randian discipleship, something pointed out, with a shudder of aversion, on this very page last week.
Baum, though, seems just a bit miffed that Greenspan seemed to stray so, during his public service, from the principles of one who had once been in Ayn's hallowed inner circle.
Moving on from this sordid business, though, what would a Caroline Baum column be without some gurgling by James "Dow 36,000" Glassman?
Who knows what earnings metric Glassman used to come up with this assertion, conveyed by Baum : "The price-to-earnings ratio of the Standard & Poor's 500 Index averaged 19.21 in 1996 compared with 19.59 in the first nine months of 2005."
You might be able to torture some spreadsheet enough to come to such a conclusion, or you could compare 1996 "operating" earnings to 2005 "core" earnings to get close to the Baum/Glassman assertion, but if compare Price-to-trailing-as-report-earnings ratio for 12/31/1996 to today's P/E ratio using the same metric, you get a 1996 P/E of 20.6 comparied with a P/E today of 17.2. Apples to apples, with today's P/E nearly equal to the average market P/E since 1960.
But it's probably unreasonable of me to expect a rational comparison from the author of Dow 36,000. Especially in the column of a free-market fetishist and sometimes Bush apologist.