The Unknown Ideal

Here's what jumps out at me from the updated Valuation Worksheet: US stocks are dead-on "fair value" based on historical price-to-earnings ratios. In fact even while harshing one's buzz with S&P's stingy "core earnings" estimates, we see a P/E ratio below the average since 1960. So even if one is really concerned that earnings quality significantly deteriorated during the long bull run of the 80s-90s, as S&P was when it formulated core earnings, one needn't really have concerns about the level of US stock valuations, because even when earnings are stripped the the bone, stocks are looking pretty fairly priced.

Alan Greenspan is concerned about the price levels of global assets, though, because of a "liquidity glut." Gee, where did that come from? This guy is just too much.

I am reminded of nothing so much as his school-marmish finger-waggings to Congress over the massive federal budget deficit, the very budget deficit he helped create with his relentless championing of the irresponsible Bush tax cuts.

Posted by The Unknown at 3:18 PM | Permalink

Not much to say about the updated asset class return worksheet other than isn't it interesting that a TIPS fund didn't beat inflation over the course of the past year, and how about them REITs and International Stocks? And I'm sure that the Gold Bugs will feel vindicated, even though over the long-term, Gold barely beats the rate of inflation.

Here's a summary picture of the returns (note that returns include dividend/interest reinvestment for the period, with the exception of the year-to-date return on Small Cap US Stocks):

Posted by The Unknown at 3:00 PM | Permalink