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Hate to break it to you, but stocks have been in a secular bear market since 2000. Check any dow to gold chart.
The dow is barely above the high in 2000, and you think there was no inflation in between? Your down, the dow is down.
Now we can debate if the market is now in a secular bull market at the beginning of one or not, but I venture to say that it is not, and won't be for a while till the conditions for the stock market become very bad.
Tpyically stock markets bottom when things are bad, when P/E ratio's are undervalued, when dividend yields are high, we have high P/E ratio's (in a bubble) and super low yields. These typically aren't symptoms of a secular bull market starting but a continued secular bear market.
It only took tripling or quadrupling our base money supply and having banks speculate to kick off this bull market
And the average secular bear market lasts 14.5 years, so statistically we are near the start of a new secular bull run. Anybody who has been scooping up stocks at bargain prices the last five years is going to be well rewarded for the next 20 years (average secular bull life cycle).
Your posting the dows points, you need to price it in terms of soething else. You aren't taking into account the falling dollar.
This is how you can price things against things to see if something is overpriced or underpriced. You cannot use a dollar as a measuring stick because the measuring stick isn't stable.
Dow to gold ratio
The current ratio is 12.13 today. As you can see, we are almost as high as the stock market bubble in the roaring 20's at this ratio.
Another factor that makes me think this is not attainable are P/E ratio's and Dividend Yields.
Shiller index of P/E ratio and history.
today the P/E ratio of 15.3 and gaining higher. (this was in 2012) Which is expensive. When coming from an all time record fo dow to gold in the chart above, I suspect the dow will get very cheap against gold in the future.
Next are dividend yields of the S&P 500. They are at historic lows (current is 1.92%).
This does not show a secular bull market beginning.
You have commodities that are cheap in relation to the dow and S&P 500, expensive P/E ratio's historically, and very low dividend yields.
This doesn't look well for stocks in the long term. I am still a gold/silver/commodities bull till this changes. Because the only thing that matters isn't the dollar price on the dow but assets priced against other assets. It means everyone is still piled into equities. They are expensive.
This is how you can price things against things to see if something is overpriced or underpriced. You cannot use a dollar as a measuring stick because the measuring stick isn't stable.
And the price of gold is stable? Can you explain that?
I've been a bear on the market for a long time. Skeptical really since about 1998 or 2000. In 1999 I believe, Warren Buffett penned a piece for Fortune magazine about stocks. It basically said that peoples expectations for stocks (in 1999 going forward) can't possibly meet expectations.
For the dow to rise from 1999 onward (as it did from 1982 to 1999)......basically interest rates would have to fall, and/or corporate profits would have to rise (as a percent of GDP). Those things have happened....thus supporting the market.
You look at a chart of after tax corporate profits to GDP, it's wild.
At bear market bottoms (in the 70's, early 80's) it was at 4%! Now it's up near 11%! The "e" in p/e has been way over inflated IMO and is not sustainable. How much of "earnings" now are cost cutting, doing more with less?
It seems like if interest rates go back to normal (say the average from 2000-2010), and corporate profits go back to something in the historic norm (say even 7%), the p/e would have to go way down to create a "bottom".
I have to say it's nice to look at all these interesting charts and graphs. But at the end of the day, the proof is in the pudding.
The S&P 500 has gone up 20% just since the beginning of this year alone. This means that if you had $100,000 invested at the beginning of the year, then you made $20,000 in the last 6 and 1/2 months by doing absolutely nothing.
So, the question you have to ask yourself is - Would you rather stare at and argue about a bunch of charts and graphs, or would you rather be invested in the stock market and making money?
If you put $100,000 in the stock market at 2001 you would have $141,345.
If you put $100,000 in gold during the same time frame you would have $490,151.
Looks like the dow is getting beat up over the secular bull market for commodities.
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