"Right now, the S&P 500 earnings yield is 3-times the short term treasury yield, which is the highest going back 20 years. [This means stocks are cheap relative to bonds.]
At the market bottom in 1982, this ratio peaked at 1.50--so we are twice as undervalued relative to bonds as in 1982.
Important market tops such as 1987 yielded ratios of .70, while in 2000 it scrunched down to .50 before the bear market took over." Are stocks far cheaper relative to bonds than at any time in recent history?
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Yeah, I have a comment. The fact that I have about 75,000 work hours of securities experience and training to to fall back on, and know that data and various formulas as well as anyone could, is costing me a fortune and has for about the last 10 months.
My ex wife and I were talking about the stocks we bought in 1982, vs. the cd's we bought around the same time. The cd's were for 18.5%...that is what stocks were competing against. It made NO sense to buy stocks..they weren't that cheap, and they looked damn awful compared to the 18% guranteed. This is what is so amazing reading these boards now. Reading posts here from folks who think the 73/74 period or in 82, things were cheaper...they obviously weren't there actually dealing with it. I know, you think that pe of 6 looked good, but what those who weren't there aren't "getting" is that you had guaranteed instruments that were very attractive in comparison. This isn't the case now.
Or is it? Money has poured into RE, and it may be that this is the real culprit in making the bulls look dumb for now, just lke the bears looked dumb from 6/99-3/00. We'll see how it all works out. Unfortunately, it seems clear that this is still a bear market, and there is work to do on the downside. We are straying farther and farther away from a market that pays up for an idea or two, and in this land, I personally feel that is a very bad thing for us all.
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