Friday, May 23, 2008

The New SP 500 Bubble!

Financial Sense, market commentator, Martin Goldberg, has made an interesting posting called Bull Market in Trust, Bear Market in Dividend Yields

This part I find so interesting:

The apparent failure near an all time high suggests that the year 2000 high in the S&P 500 may have marked the beginning of a new secular bear market which, in spite of the eight year march to a marginal new high, has not ended. Remember, the 2000 high included contributions from a known and confirmed technology stock market bubble. So was the more recent S&P 500 high totally “clean” and supported by valuations? In my view, this new high is characterized by a general stock market bubble which is not getting any attention in the media or financial industry for several structural reasons, not the least of which are the more obvious bubbles that are taking place (and bursting) in real estate, US consumer debt, and also commodities (actually the commodity bubble is a legitimate one caused largely by central bank-created inflation). When was the last time you heard any serious discussion of dividend yields of stocks in comparison to those that occurred prior to the 1990s race to the 2000 high? Today’s stock market bubble is Wall Street and the financial industries’ “dirty little secret.” They’ll only tell you what they need you to know.



Still, unless the market action warrants it, you don’t need to
know that the average dividend yield of S&P 500 stocks is just under 1.9% and dividends of less than 3% used to be cause for valuation alarm. (There are 113 S&P 500 stocks that pay no dividends at all.) All you have to do is believe that today’s businesses don’t require that corporations share their profits in any meaningful way with its shareholders.

Click here for the rest of the posting: Bull Market in Trust, Bear Market in Dividend Yields

2 comments:

The Wanderer said...

http://bp3.blogger.com/_7LVtY_HPRvg/SDd47eHNv8I/AAAAAAAAA2o/vBFm6droBvc/s1600-h/world.jpg

http://bp0.blogger.com/_7LVtY_HPRvg/SDd47uHNv-I/AAAAAAAAA24/FnR4OOM3JFU/s400/world2.jpg

http://bp0.blogger.com/_7LVtY_HPRvg/SDd47uHNv9I/AAAAAAAAA2w/_An_DNPr8yE/s1600-h/world1.jpg

Dear Moola,

looking at the images around the world, i don't know how to "decouple" them, except that Nikky is really out of whack.

rgds,

Moolah said...

My Dearest Wanderer,

Decouple is such a nice theory.

However, in all honesty, in such a globalised world, can the world exist without the US?

The US Consumers, if they stop spending what will happen to net exporters to the US Markets like China or India?

Who will they export to then?

Are we to believe that there would be ZERO impact?

Can China consume all their goods themselves?

Made In China. Used Only In China?

btw... in the long run... is such an easy term to use.

Yeah, I have no doubt that the WORLD should be a better place to live in the long run.

But how long of a long are we talking about?

Can we even live to see it?

Here's something that Buffett had been saying for so long too about the long run.

http://www.cnbc.com/id/23445235

7:23 AM

Joe asks if Buffett is more negative now than has been in a few years. Buffett replies that over time, everything will be OK. Everyone's children will live better in the future than their parents live now. The U.S. still has a market system and a metitocracy and will continue to do well.

See? Even Buffett knows that in the long run the US economy would still be OK!

However, the RISK here is... obviously how negative is the current negativeness?

For sure the world would recover. It always had and I too have zero doubts that it will recover too.

But for now, the obvious question is, based on current variables, do I want to just discount everything and only look at the positive long side?


ps... here is one market that has truly outperform - Brazil due to the fact that it's richness in commodities!

http://finance.yahoo.com/echarts?s=%5EDJA#chart2:symbol=^dja;range=2y;compare=^bvsp;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined