oregonrain

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  • Lost Decade for Stocks?
    I just looked at another analytical argument that we could be in a "lost decade for stocks." In essence what these people argue is that two things really drive stocks. That is real GDP and PE ratios PE ratios they argue are largely driven by inflation and inflation expectations. In a nut shell if you think that inflation is headed up...then PE ratios which are still high are going to come down. This makes the argument for a "lost decade."

    I may have messed up their argument but check it out for yourself here. I have no connection with these guys at all. Just saw them mentioned in a WSJ article. crestmontresearch.com

    Here is the mention in the WSJ

    Ed Easterling, president of Crestmont Research, argues that record increases in earnings and profit margins in recent years make prices look artificially cheap. He prefers to look at the 10-year trends in earnings, from which he removes the impact of inflation and smooths out the short-term ups and downs in profit margins. That, he contends, provides a cleaner picture of stock valuations.

    I would be interested in comments on this...and what they are saying along with our friends from bespoke
    Mar 09 22:22 pm |Rating: 0 0 |Link to Comment |View article

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