When I first started posting here and elsewhere, I only gave fundamental data, and this lead to numerous negative responses, most of which were obviously from folks who had no actual interest in a discussion. You know, you give 8-10 reasons why the data is improving, why oracle is cheap enough at 8, ciena is cheap enough at 3, point out that software has never been this cheap at 1-2x sales, etc etc, and basically the response attacks the numbers as fraudulent. The fed model has been abused here as useless for example, and that points out that the loudest voices here obviously never studied finance.(The fed model is a basic guide to tell you when the market is getting distorted, but you have to plug the right numbers in. It is a most basic but important model as it compares the relative valuation of stocks to interest bearing investments) So I really don't even want to mention fundamentals anymore, because there just seems to be too few here who care and those that do care are all caught up in the pe's yet refuse to see that valuations are quite low if the economy is recovering. The SP's forward pe is about 15/16, so with rates this low, it is a VERY unusual bargain. BUT e must recover. It's pretty clear that that they are poised to.
The first thrust up, which is always based on hope growing, is very much ta based. The second thrust up, when the e come through, starts the process of looking at predictable forward e and reasonable multiples. The leg after that has typically been the expansion of the peg out to 1.5 to 2x a high growth rate. In late 99 early 2000, the pegs went to 3, and there was your bubble. 2x was the peak in every previous decade at least for awhile, even after 1932 and 1974.
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