tag:blogger.com,1999:blog-22517597.post115565259534161478..comments2024-03-03T11:13:39.377+11:00Comments on Moomin Valley: Are We Still in the 2000- Bear Market?mOOmhttp://www.blogger.com/profile/03440274434662150925noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-22517597.post-1155673137965827582006-08-16T06:18:00.000+10:002006-08-16T06:18:00.000+10:00I haven't read Bernstein. Is he talking about pric...I haven't read Bernstein. Is he talking about price changes or total return? 3.5% seems low for total return even after inflation to me. The thing is because of an increasing share of profits in GDP we have got down to a P/E near historic averages at this point. Assuming this share of profits in GDP is maintained we should see going forwards a total return equal to E/P+ the % change in real GDP. That would be something like a 7-8% total real return. In the 1982-2000 bull market returns were above that because P/E ratios were rising from a very low level. Bears think returns will be low going forwards because they think that P/Es will decline to historic lows of 8 or so. They might do that eventually, but based on Kondratief that might not happen for 30 years.... Of course the share of profits in GDP might fall back again to historic lows. I think though we are in a more permanent shift to higher profit levels...<BR/><BR/>So the bottom line is there are lots of scenarios out there. None of the reasonable ones point to the extremes of either the 1982-2000 bull market or another great depression.mOOmhttps://www.blogger.com/profile/03440274434662150925noreply@blogger.comtag:blogger.com,1999:blog-22517597.post-1155663554291114762006-08-16T03:39:00.000+10:002006-08-16T03:39:00.000+10:00mOOm,That's fairly exciting and optimistic news. ...mOOm,<BR/><BR/>That's fairly exciting and optimistic news. How do you compare it with Bernestein's long terms views of 3.5% annual large cap equity gains with small caps going up to 7% (over the next 20-40 year period)?<BR/><BR/>Regards,<BR/>makingourway<BR/>www.makingourwayblog.commakingourwayhttps://www.blogger.com/profile/13748811641577990850noreply@blogger.com