babylon....
No, I have long been voicing the facts of extreme valuations in the markets, and assuming a decent economy many stocks would still be very overvalued at current prices. I do believe however that with a good economy that the decline would have been slower, and that the added pressure recently has been mostly due to folks finally coming to the realization that the much ballyhooed recovery is not going to happen. The reality for me is that the two have been intertwined almost from the beginning, and I have predicted since last summer (2001) that after a holiday surge for inventory rebuilding for the holiday season the market would sink back into recession - it took a little longer than I had thought, but we are there. Looking back, I do not see how there could have been any other outcome.
I was a broker during the 70's bear markets, and see little resemblence between now and then. The markets did not act the same as what we are now seeing, and I see little chance for a booming economy to emerge and bring earnings back in line with the market since the underlying economic problems are completely dissimilar.
What I am saying is that we are not only returning to normal valuations, but we are also entering what I expect to be a rather long recession that could be deeper than folks think. Combine the two and you get a double whammy - I expect the markets to sink lower than even the newly converted bearish pundits are now belatedly calling for, and that means there is still a good deal of downside left for the markets. I have yet to see real capitulation in this market, and I think it is because folks still think that if they hang on just a bit longer, we will make the turn. I do not think that is the case.
Hope that clears things up a bit.
mlsoft
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