Thursday, January 01, 2009

The stock market never was a good idea - Closer to the Ideal

Great blog by Closer to the Ideal (can't seem to find the author's real name) about the Depression and how it affected the stock market for years to come.  Something to think about...
There were millions of citizens, like my great-grandmother, who avoided the stock market after 1929. They helped create the low valuations that made the stocks on the stock market a good value, using traditional metrics like P/E ratios. Once upon a time, in a land now far, far away, a P/E ratio of 15 was considered frighteningly high. This month, the Dow Jones is suddenly back under 15, having spent most of the last decade above it. Will this level again come to be seen as normal, or will this eventually be seen as an aberration?

Posted via email from David Van Couvering's Posterous

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