Look: I am eager to learn stuff I don't know--which requires actively courting and posting smart disagreement.

But as you will understand, I don't like to post things that mischaracterize and are aimed to mislead.

-- Brad Delong

Copyright Notice

Everything that appears on this blog is the copyrighted property of somebody. Often, but not always, that somebody is me. For things that are not mine, I either have obtained permission, or claim fair use. Feel free to quote me, but attribute, please. My photos and poetry are dear to my heart, and may not be used without permission. Ditto, my other intellectual property, such as charts and graphs. I'm probably willing to share. Let's talk. Violators will be damned for all eternity to the circle of hell populated by Rosanne Barr, Mrs Miller [look her up], and trombonists who are unable play in tune. You cannot possibly imagine the agony. If you have a question, email me: jazzbumpa@gmail.com. I'll answer when I feel like it. Cheers!

Tuesday, January 4, 2011

Taking Stock

Mish has screwed up political views, which also screw up his political economic views.  But when politics is out of the picture, such as in a  pure view of the stock market, his native intelligence and savvy analytical skills are able to operate unimpeded.

Here is a great example.

Bottom line: 

In spite of what most cheerleaders suggest, this is one strenuously overvalued market.

And this is based on P/E, as reported.  For reasons that Mish talks about, earnings, despite some feeble attempts at reforms in the post-Enron era, are wildly inflated, at least in the financial sector.

Is you favorite analyst taking a positive view?  It's what they do. Look it up.  Sorry, I'm nor registered either, but Mish provides a very telling graphic.   And this quote:

To better understand their accuracy, we undertook research nearly a decade ago that produced sobering results. Analysts, we found, were typically overoptimistic, slow to revise their forecasts to reflect new economic conditions, and prone to making increasingly inaccurate forecasts when economic growth declined.

Mish's conclusion:

On that basis, the market (and forward estimates) are both far frothier than the opening chart implies.

I have to agree.

No comments: