History shows that the stock market usually hits bottom before the economy does.THAT MEANS THAT STOCKS CRASHED DEEPER ON PREVIOUS RECESSIONS.
In October, Warren E. Buffett, one of the world’s most successful investors, said he was buying American stocks because they usually rise “well before either sentiment or the economy.” But even he acknowledged not having “the faintest idea” what would happen in the next month or year.
Since then, stocks have dropped by another 20 percent, and with the market at levels last seen in 1997, stocks are cheap by historical standards. The price-to-earnings ratio — which investors use to gauge how much they are paying for each dollar of corporate profit — is around 13, about 20 percent lower than the average of the last 130 years.
... “All the indicators suggest you should be buying and not selling,” he said.
Still, Mr. Napier acknowledged that stocks, while cheap, could fall further. Measured by their 10-year price-to-earnings ratio, stocks were a lot less expensive in the early 1980s, when the ratio fell to less than seven, and in the 1930s, when it was below six.
THE ARTICLE HAS AN ADOBE FLASH PRESENTATION OF THREE CHARTS - ALL OF WHICH PROVES THAT THIS RECESSION IS NOT AS BAD AS THE PREVIOUS ONES.
- THE FIRST CHART SHOWS THE ABOVE: THAT P/E RATIOS ARE HIGHER NOW THAN IN PREVIOUS RECESSIONS.
- THE SECOND CHART SHOWS THAT HOME VALUES HAVE DECLINED, BUT NOT DECLINED AS MUCH AS IN PREVIOUS RECESSIONS.
- THE THIRD CHART SHOWS THAT SINCE THE RECESSION BEGAN, SPENDING IS WAY DOWN AND SAVINGS ARE WAY UP, BUT NOT AS MUCH AS IN PREVIOUS RECESSIONS.
AS THINGS HAVE ALREADY FLATTENED OUT, THIS PROVES THAT OBAMA WAS LYING AND FEAR-MONGERING - IN ORDER TO PASS HIS PORKURIFFIC SOCIALISTIC SPENDING BILL - WHEN HE WAS CALLING THIS RECESSION A CATASTROPHE.
OBAMA'S FEAR-MONGERING - RECENTLY ABATED - MADE THINGS WORSE.
OBAMA'S TAX & SPEND PROGRAMS WILL HURT EVEN MORE - DOWN THE ROAD - IF WE DON'T ELECT A GOP CONGRESS IN 2010.