tag:blogger.com,1999:blog-7126131564610858851.post3552693914316896497..comments2023-09-09T10:21:32.853-04:00Comments on The Hackensack: Bill Gross on the Q RatioDaveinHackensackhttp://www.blogger.com/profile/01313169814904229272noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-7126131564610858851.post-59918531063305827992008-12-08T00:35:00.000-05:002008-12-08T00:35:00.000-05:00Michelle,Your assets will be managed in a blind tr...Michelle,<BR/><BR/>Your assets will be managed in a blind trust while you and your husband are in the White House, so no need to trouble yourself with the details of investing. For the rest of us though, the recognition that we are in a secular bear market means that we need to have more conservative and realistic expectations about the earnings multiples the market will grant stocks over the next decade or so. For example, if a former high-flyer traded at a double digit multiple a few years ago, it may be unrealistic to expect it to return to such lofty multiples. Remember, when the last secular bear market ended, stocks traded at an average of about 9x trailing earnings, and when the one before that ended, they traded at about 7x trailing earnings.DaveinHackensackhttps://www.blogger.com/profile/01313169814904229272noreply@blogger.comtag:blogger.com,1999:blog-7126131564610858851.post-2966630246673483982008-12-07T18:29:00.000-05:002008-12-07T18:29:00.000-05:00Barack is too shy to ask because he doesn;t know w...Barack is too shy to ask because he doesn;t know what a secular bear market is.<BR/><BR/>If we're in on how would that affect your stock picking now?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7126131564610858851.post-52001051382567975302008-12-07T16:20:00.000-05:002008-12-07T16:20:00.000-05:00No, but I think we are in another secular bear mar...No, but I think we are in another secular bear market for stocks, one that started in 2000.DaveinHackensackhttps://www.blogger.com/profile/01313169814904229272noreply@blogger.comtag:blogger.com,1999:blog-7126131564610858851.post-73141856714632191242008-12-07T14:27:00.000-05:002008-12-07T14:27:00.000-05:00Are you expecting another great depression now?Are you expecting another great depression now?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7126131564610858851.post-2581831145418124442008-12-07T11:54:00.000-05:002008-12-07T11:54:00.000-05:00I agree about 10-year Treasuries looking like lose...I agree about 10-year Treasuries looking like losers. Gross said <I>corporate</I> bonds, not Treasuries, looked attractive though. <BR/><BR/><I>"Not only are stocks historically cheap as shown in the Q chart, but they now compete with record low fixed interest rate bonds and CDs as opposed to the early 1980's when banks offered double digit rates to savers."</I><BR/><BR/>Stock market history didn't start in the early 1980s though. At the end of the secular bear market that started during the Great Depression, stocks had lower valuations (S&P had an average P/E of 7x trailing earnings) despite the low interest rate environment. In fact, stock dividend yields were higher, on average, than corporate bond yields or Treasuries.DaveinHackensackhttps://www.blogger.com/profile/01313169814904229272noreply@blogger.comtag:blogger.com,1999:blog-7126131564610858851.post-87663679817067537952008-12-07T08:47:00.000-05:002008-12-07T08:47:00.000-05:00Not only are stocks historically cheap as shown in...Not only are stocks historically cheap as shown in the Q chart, but they now compete with record low fixed interest rate bonds and CDs as opposed to the early 1980's when banks offered double digit rates to savers.<BR/><BR/>That makes the undervaluation of equity look even more compelling than it did then.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7126131564610858851.post-27138289553464122272008-12-07T08:20:00.000-05:002008-12-07T08:20:00.000-05:00With all the printing of money going on I think it...With all the printing of money going on I think it's a given we'll see much higher inflation in the coming years. <BR/><BR/>The current fear of deflation is temporary and overblown. <BR/><BR/>Ownings bonds with more than a one year maturity could end up being the worst investment error you could make.<BR/><BR/>You need to own something that can be marked up when inflation kicks in. Real estate, commodities [from today's levels, and stocks at current bargain prices have the capacity to do that. <BR/><BR/>10-year treasuries at 3% look like a sure loser of major proportions.Anonymousnoreply@blogger.com