A little stream of consciousness about money, markets, sports, politics, etc, etc.
"Predictions are hard to make, especially when they concern the future"-the Yogi
I find Random Roger to be one of the more provocative bloggers out there. I don't always agree with him, but he makes me think. He had a very interesting post here on "individual stocks" and "trading sideways", and I commented on it here.
2 comments:
Anonymous
said...
Trading range talk. It seems reasonable to me that the market is in a generational trading range much like the 66-82 period. The valuation issue is itself cyclical is it not? It seems there is no arguing that valuations contracted from 1966 through 1982 and then expanded through 1999. That last period of contraction was accompanied by rising rates, rising CRB, Asia and Middle East comflicts, the Cold War and declining confidence in the financial markets. The period of increasing valuations saw declining rates, declining CRB, the Reagan Peace Dividend while enjoying the influx of Boomer $ to the market. That ended with extreme confidence marked by the bubble in 1999. 1999 through ? (16 years?) is starting with rising rates, rising CRB, rising military expense due to terrorism, and Boomers moving into retirement. While I am not at all a perma-bear I do believe it pays to have a longer term perspective on where we are in the generational cycle. Looked at in segments 1966-1982; then 1983-1999 the market risks and returns were unique and alternative asset classes were far more important in the 'range' phase than in the 'expansion' phase. It surprises me that although we except historic returns, historic volatility and historic correlations in determining asset allocation decisions we choose to ignore the HISTORY of generational secular influences on the markets.
I agree, JC. I think part of what will go on over the next 5-10 years or so is contraction in valuations. I see it ending somewhere in the early 2010s with single digit PEs, Ben Graham cigar butts everywhere, and the DrudgeReport proclaiming "the death of equities".
2 comments:
Trading range talk. It seems reasonable to me that the market is in a generational trading range much like the 66-82 period. The valuation issue is itself cyclical is it not? It seems there is no arguing that valuations contracted from 1966 through 1982 and then expanded through 1999. That last period of contraction was accompanied by rising rates, rising CRB, Asia and Middle East comflicts, the Cold War and declining confidence in the financial markets. The period of increasing valuations saw declining rates, declining CRB, the Reagan Peace Dividend while enjoying the influx of Boomer $ to the market. That ended with extreme confidence marked by the bubble in 1999. 1999 through ? (16 years?) is starting with rising rates, rising CRB, rising military expense due to terrorism, and Boomers moving into retirement. While I am not at all a perma-bear I do believe it pays to have a longer term perspective on where we are in the generational cycle. Looked at in segments 1966-1982; then 1983-1999 the market risks and returns were unique and alternative asset classes were far more important in the 'range' phase than in the 'expansion' phase.
It surprises me that although we except historic returns, historic volatility and historic correlations in determining asset allocation decisions we choose to ignore the HISTORY of generational secular influences on the markets.
JC
I agree, JC. I think part of what will go on over the next 5-10 years or so is contraction in valuations. I see it ending somewhere in the early 2010s with single digit PEs, Ben Graham cigar butts everywhere, and the DrudgeReport proclaiming "the death of equities".
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