Rally Comparison | 1982 | 2009 |
P/E Multiple | 8X | 26X |
Dividend Yields | 6% | below 2% |
Book Value | Discount to Book | 2X Premium |
Monetary Policy | Reducing money growth and inflation rates | Creating money growth and inflation rates |
Fiscal Policy | Aimed at reducing nondefense spending | Aimed at accelerating nondefense spending |
Deficits | Peaking and coming down relative to GDP | Surging to 10%+ relative to GDP |
Global Trade Barriers | Were being torn down | Are being erected |
Regulation | Deregulation in vogue | Re-regulation rising |
US Dollar | Plaza Accord bull market | Mercantilist bear market |
Household Credit | Balance sheets and participation rates expanding | Balance sheets now contracting |
Tax rates | Income, capital gains and dividend taxes declining | Taxes Rising Now |
Wednesday, November 18, 2009
Comparing Rallies
Here is a good illustration from Barry Ritholtz of why I'm a bit wary of the market right now:
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