Replies to post #12484 on Zeev's Turnips Patch-No Politics (ZEEV)

[Babylon]

...but the economic situation is deteriorating and causing valuations to be pared back even more with a continuously dropping target as we go down.

Mlsoft, I'm curious as to your deeper thoughts on this. Are you implying that if we currently had a good economic situation, that valuations/stock prices would be higher than they are today(?) - keeping historical valuations in mind. I'm thinking along the lines of the early '70's bear, and how the economy improved dramatically after that, while the market essentially traded sideways for many, many years, while valuation caught up....perhaps my history is off.

It seemed to me that you were suggesting that with a better economy today, that higher multiples - and the valuation correction (which I believe is entirely a inflated credit issue), would have been completed by now. Please correct me if I'm wrong... TIA

[Sir Realist]

When you factor in the approaching boomer retirement, ethnic/religious chaos in the oil producing regions, economic chaos in S. American oil regions, the impact of global trade on US wages (the sole reason inflation has been kept in check), the wildcard called China, the lack of personal savings and the real estate bubble, there certainly are many negative economic pressures in place to drive the market lower longterm.

I can also chart a nearterm rise that, if it breaks 1408, would go to 1555-1570, no later than 10/3. Without a serious dollar dip below fresh support, I think we can hold 1230 now, till late this quarter. But I'm fairly certain we'll see 970 in the COMP no later than mid-January. Even with anticipated prime rate cuts by December's FOMC.

I think your concerns are justified, in the long run.