Is The Bottom Almost Here?

[Gregmal]

Well theres another very simple aspect to this, but its hypnotizing and very much a siren song for many the egomaniac who needs to be right or "call it". Stocks either go up, or down. Many times, those calling it, think they are geniuses simply because the direction matched the forecast, even when the logic/framework behind the forecast was totally wrong. So they sit around waiting to eventually be "right"...and generally speaking, if given enough time, one can almost always clip a window where they can claim to have called it. However, if instead of being deathly loyal to an ego and "being right"...one can also choose loyalty to making money...IMO..the reason one is in the markets, and in which case the whole "calling it" thing and sitting around waiting for that cookie...becomes a fools game. 

[changegonnacome]

2 hours ago, Gregmal said:

If theres no longer inflation, why wouldnt all those programs be back on the table?

 

The problem is that there is inflation and it ain't going away any time soon as much as people wish it just would.

 

It does goes away with deep underlying weakening of credit conditions, spending & unemployment (or a magical productivity boom).....the weakness let's be clear, is what the Fed is shooting for.

 

My math - which I've covered ad nauseum, in an economy which looks like what we have now, is pointing towards ongoing & persistent/entrenched whatever way you want to put it ~mid-4's inflation (driven almost wholly by domestic services inflation).

 

Please look at the below from the Atlanta Fed in terms of wage growth...which is a proxy for nominal spending growth...now think about this wage/spending growth in the context of poor productivity growth & ultra low unemployment. You CANNOT print 6% annualized wage increases in a sub-2% productivity economy and expect inflation to be anything other than above 4%.

 

 

https://www.atlantafed.org/chcs/wage-growth-tracker

 

As bad as mid-4's inflation is......think about how vulnerable that mid-4's inflation is to external forces out of the US's control.....like another energy shock. There is very little 'wiggle room' with an inflation number like that.....its unacceptably high. End of.

 

Finally and as I've said before.......one should think of money (but more precisely 'money' which turns into spending on goods/services) as like shares outstanding issued against the quantum of goods and services being produced in your economy......issuing more 'shares/money' say via nominal wage increases or government 'handouts'....does nothing to change the REAL quantity of good & services.....it serves to change only the quoted price....in this case the quoted price of goods and services goes up.....we call that inflation!

 

When its new shares in a company....and when the business fundamentals in that company haven't changed an iota.....we call that "dilution"....and the knowledgeable among us know that the price of our shares should go down.........a dilution event in company shares is akin to inflationary dilution in an economy that starts giving itself 6% nominal pay increases......and is only growing REAL output at an anemic level.

 

Its like those AMC APE fools thinking more AMC shares being issued is gonna make them rich.....when in fact it's more REAL people going to the movies & buying popcorn that will do it.

Edited April 6, 2023 by changegonnacome

[mcliu]

4 hours ago, Viking said:

It really does look like we are headed for a 1970’s type situation, at least when it comes to inflation. This could well play out over the next 5 or so years.

The reason I don't think 70s inflation will come back is because the the 70s has already happened and central bankers understand the implications of runaway inflation and the difficult in taming it.

I think they'll err on the side of lower inflation than let it run too hot. 

[Viking]

4 minutes ago, mcliu said:

The reason I don't think 70s inflation will come back is because the the 70s has already happened and central bankers understand the implications of runaway inflation and the difficult in taming it.

I think they'll err on the side of lower inflation than let it run too hot. 

That is not what the Bank of Canada is doing. Unlike the Fed, the BofC is on pause. They are in the ‘pray we have tightened enough’ stage. Because if they have not tightened enough and inflation gets entrenched in the Canadian economy they risk losing credibility. Once inflation expectations get unanchored then we are back into a 1970’s type situation. I have no idea how this plays out. Lots at stake. 

[Viking]

2 hours ago, Gregmal said:

Well theres another very simple aspect to this, but its hypnotizing and very much a siren song for many the egomaniac who needs to be right or "call it". Stocks either go up, or down. Many times, those calling it, think they are geniuses simply because the direction matched the forecast, even when the logic/framework behind the forecast was totally wrong. So they sit around waiting to eventually be "right"...and generally speaking, if given enough time, one can almost always clip a window where they can claim to have called it. However, if instead of being deathly loyal to an ego and "being right"...one can also choose loyalty to making money...IMO..the reason one is in the markets, and in which case the whole "calling it" thing and sitting around waiting for that cookie...becomes a fools game. 

The S&P is trading today where it was trading 2 years ago. That is not a great 24 month return. US inflation was 4.7% in 2021 and 8% in 2022. I think that means $1,000 invested 2 years ago is now worth $877 = - 12.3% real return. 
 

How is 2023 looking? Impossible to know. But stocks sometimes go sideways for years and years. In a high inflation environment that is not a recipe for success. 
 

What is an investor to do? Find a strategy that fits how you are wired; let’s you sleep well at night; is going to deliver the risk adjusted returns you are targeting. 
 

Buy and hold of a majority of my portfolio (for very long periods) is not a fit for me. It sounds like it is a great fit for lots of board members. That is great. My view is there is no right or wrong way. Two people can do very different things and they can both be right and very successful at the same time. I hope all investors on this board hit the ball out of the park this year.

Edited April 6, 2023 by Viking

[tede02]

This is from last fall, near the bottom of the equity markets. I've gone back to it several times. The first thing PTJ talks about has happened, short rates are no longer moving up. But the equity markets (according to Jones' articulated model) are ahead of where they should be. We've already seen a big rally in the stuff that was beaten down last year. But, maybe the recession starts to show prominently and earnings take a hit pulling equity prices down before the Fed cuts, then we find bottom. I'm no market timer but it is fun to talk about. 

 

 

[mattee2264]

There is a lot of talk about negative sentiment in the markets and most professional fund managers are privately or publicly expressing bearish views. But ultimately it is not what investors think but what they do that matters. And based on the current level of stock prices it seems most investors are holding on to their stocks and in many cases buying more. 

And we are seeing the familiar pattern of people seeming to think that during times of economic weakness that Big Tech is a good safe haven and I think that is why the banking crisis has been seen as bullish as it is seen as discouraging further rate hikes by Central Banks and bringing the inevitable pivot forward and that is bullish for growth stocks whose valuations are very sensitive to the discount rate used. 

 

And with most money managed by institutions there is a career risk to selling before everyone else. Much better to go off the cliff with everyone else than risk selling too early and losing AUM if the bull market gets extended a few more quarters. 

 

 

We are also in unfamiliar territory. We are heading for a policy-induced recession that is following a policy-induced boom. And they will be asymmetrical. Because you can very quickly inflate the economy by printing a lot of money and giving it to people to spend. But releasing the air takes a little longer as interest rate rises take time to feed through the system and until they start to cause real pain businesses have no reason to cut employment and high levels of employment can sustain spending and with most people on fixed rate mortgages and under no pressure to sell their houses we aren't seeing much in the way of pressure on consumer spending from higher mortgage costs or negative wealth effects. And while we are sitting on huge amounts of public debt politically it is very difficult to raise taxes or cut welfare even though it would have a much quicker effect in terms of inducing a recession and bringing inflation back down to trend.

 

And a lot of the correction has been in real terms. In cumulative terms prices have gone up 20-30% since the pandemic. So in real terms the stock market is probably back to pre-pandemic levels. And while nominal interest rates are a lot higher since the pre-pandemic average real interest rates are similar at around -2%.. 

 

 

 

[changegonnacome]

14 hours ago, tede02 said:

earnings take a hit pulling equity prices down before the Fed cuts, then we find bottom. I'm no market timer but it is fun to talk about.

 

Earnings have already taken a hit.......but even more so if you do the correct thing intellectually & you inflation adjust them downwards...as I've said before as an example Apple's fiscal Q1 (Christmas Qtr)...showed a YoY fall in nominal earnings of about 13%......not great but in real terms its much worse.....it's more like a ~20% fall in earnings if you inflation adjust it to real terms. Inflation is the silent thief of portfolio returns......and so you've got to be careful not become a boiling frog as an investor in an inflationary environment.

 

Finally the reality of historical inflation/Fed driven bear markets to be mindful of.......is that lots of the fall in equity prices happen usually only AFTER the Fed begins to cut rates...its both a function of the reality that the underlying economy is in trouble AND kind of peak pessimism.......I think there is feeling out there that once the Fed starts cutting we are just magically off to the races again in terms of equity prices.....the historical record would suggest equity markets have more to fall once the Fed begins to cut.

[changegonnacome]

Stocks Haven’t Looked This Unattractive Since 2007 - 

https://www.wsj.com/articles/stocks-havent-looked-this-unattractive-since-2007-78fc374c?mod=hp_lead_pos3&mc_cid=22aaaa4263&mc_eid=34200f3bc4

 

 

 

It's tough out there for stocks.....with bonds giving so much competition.......the bearish amongst you will even notice how the above is using trailing earnings......there's a kind of optimism built in to the thought that SPY earnings can be maintained at even these nominal levels (never mind keeping up with inflation in real terms).....my thoughts are that earnings come down in nominal terms quite a bit but in real terms quite a lot (already have).....but I think the 10yr rallies too such that its yield drops.....the Fed will get what it wants (a slowdown/reccession).

 

Anecdotally I'm in the process of buying a house and about 50% of the loan origination officers I spoke to about a month ago in the Tri-state area have lost their jobs

Edited April 8, 2023 by changegonnacome

[keegomaster]

As another data point Prof. Damodaran has posted the following Implied Equity Risk Premiums updates at the beginning of the month (also showing the preceding month):

 

Implied ERP on April 1, 2023= 4.88% (Trailing 12 month, with adjusted payout); 5.44% (Trailing 12 month cash yield); 5.72% (Average CF yield last 10 years); 5.19% (Net cash yield); 4.64% (Normalized Earnings & Payout)

 

Implied ERP in previous month =4.78% (Trailing 12 month, with adjusted payout); 5.58% (Trailing 12 month cash yield); 5.50% (Average CF yield last 10 years); 5.34% (Net cash yield); 4.53% (Normalized Earnings & Payout)

 

Source: https://pages.stern.nyu.edu/~adamodar/  

 

[SharperDingaan]

You might want to keep in mind that Canadian CPI is highly likely to drop like a brick when the March numbers are reported; simply because a full 100 bp of change rolls off (2022: 03 vs 02) this month, and the new roll on is likely to be to be negative as well. US numbers will not be that different ..... 

 

What do you think happens when the press starts reporting a dramatic fall in the inflation rate 

https://www.bankofcanada.ca/rates/price-indexes/cpi/

 

May we all do well.

 

SD

 

 

[Spooky]

1 hour ago, SharperDingaan said:

What do you think happens when the press starts reporting a dramatic fall in the inflation rate 

 

To the moon!

[mcliu]

Unless prices are dropping, March inflation rate should still be at least 4%, probably closer to 5%..

[TwoCitiesCapital]

On 4/7/2023 at 6:02 AM, mattee2264 said:

There is a lot of talk about negative sentiment in the markets and most professional fund managers are privately or publicly expressing bearish views. But ultimately it is not what investors think but what they do that matters. And based on the current level of stock prices it seems most investors are holding on to their stocks and in many cases buying more. 

+1

 

For being the "most predicted recession in history", people are still paying 18x forward earnings that are falling....

 

That's a negative real return in this current environment (and likely the forward looking one) AND you can get 5-6% in short term bonds? Why buy equities here? 

 

For as much as people are talking about a recession, they aren't acting like it.

 

Equities have lower to go IMO. 

Edited April 9, 2023 by TwoCitiesCapital

[vinod1]

On 4/7/2023 at 7:02 AM, mattee2264 said:

e are also in unfamiliar territory. We are heading for a policy-induced recession that is following a policy-induced boom. And they will be asymmetrical.

 

On 4/7/2023 at 7:02 AM, mattee2264 said:

There is a lot of talk about negative sentiment in the markets and most professional fund managers are privately or publicly expressing bearish views. But ultimately it is not what investors think but what they do that matters. And based on the current level of stock prices it seems most investors are holding on to their stocks and in many cases buying more. 

And we are seeing the familiar pattern of people seeming to think that during times of economic weakness that Big Tech is a good safe haven and I think that is why the banking crisis has been seen as bullish as it is seen as discouraging further rate hikes by Central Banks and bringing the inevitable pivot forward and that is bullish for growth stocks whose valuations are very sensitive to the discount rate used. 

 

And with most money managed by institutions there is a career risk to selling before everyone else. Much better to go off the cliff with everyone else than risk selling too early and losing AUM if the bull market gets extended a few more quarters. 

 

 

We are also in unfamiliar territory. We are heading for a policy-induced recession that is following a policy-induced boom. And they will be asymmetrical. Because you can very quickly inflate the economy by printing a lot of money and giving it to people to spend. But releasing the air takes a little longer as interest rate rises take time to feed through the system and until they start to cause real pain businesses have no reason to cut employment and high levels of employment can sustain spending and with most people on fixed rate mortgages and under no pressure to sell their houses we aren't seeing much in the way of pressure on consumer spending from higher mortgage costs or negative wealth effects. And while we are sitting on huge amounts of public debt politically it is very difficult to raise taxes or cut welfare even though it would have a much quicker effect in terms of inducing a recession and bringing inflation back down to trend.

 

And a lot of the correction has been in real terms. In cumulative terms prices have gone up 20-30% since the pandemic. So in real terms the stock market is probably back to pre-pandemic levels. And while nominal interest rates are a lot higher since the pre-pandemic average real interest rates are similar at around -2%.. 

 

 

 

 

A lot of wisdom packed into this paragraph. Agree 100%. 

 

There had been a 25% correction in stock prices due to inflation beyond what you see on the nominal S&P 500 index value. 

 

People talk about now getting 4% on cash while waiting for the stock market to correct and are happy to be getting "paid" whereas in the past they have to settle for 0% returns. If one is thinking in real inflation adjusted terms, now they are worse off actually - getting paid 4% on which you pay taxes while inflation is 5% is worse than losing 1% on inflation while earning 0%.

 

I was in London and Paris the past week and restaurant prices seemed about same or slightly cheaper to me than in the DC metro area. I can eat out at a restaurant overlooking Notre Dame for the same price as at a mainstream chain in a US suburb. This seems crazy to me. US did experience very significant inflation in the past couple of years. 

 

Vinod

[Spekulatius]

@vinod1 Europe is a real bargain currently - not just food. You can buy a chalet in France for the same price you pay for a cardboard Mc mansion in Florida. Crazy.

Edited April 9, 2023 by Spekulatius

[vinod1]

21 hours ago, changegonnacome said:

Stocks Haven’t Looked This Unattractive Since 2007 - 

https://www.wsj.com/articles/stocks-havent-looked-this-unattractive-since-2007-78fc374c?mod=hp_lead_pos3&mc_cid=22aaaa4263&mc_eid=34200f3bc4

 

 

 

It's tough out there for stocks.....with bonds giving so much competition.......the bearish amongst you will even notice how the above is using trailing earnings......there's a kind of optimism built in to the thought that SPY earnings can be maintained at even these nominal levels (never mind keeping up with inflation in real terms).....my thoughts are that earnings come down in nominal terms quite a bit but in real terms quite a lot (already have).....but I think the 10yr rallies too such that its yield drops.....the Fed will get what it wants (a slowdown/reccession).

 

Anecdotally I'm in the process of buying a house and about 50% of the loan origination officers I spoke to about a month ago in the Tri-state area have lost their jobs

 

The author is making an elementary mistake - comparing a stock earnings yield with a nominal government bond yield. Comparing a real number with a nominal one. If you are going to compare use TIPS.

 

[changegonnacome]

21 minutes ago, vinod1 said:

comparing a stock earnings yield with a nominal government bond yield. Comparing a real number with a nominal one.

 

You’ll need to be a bit clearer on that one cause it makes no sense - are you saying stock ‘yields’ live in a universe where they aren’t subject to inflation pressures/adjustment…..or somehow they are guaranteed by dictate to adjust upwards always to provide a guaranteed real return for the purchaser like TIPS are over inflation……that’s big leap & it assumes perfect pricing power…..and ignores why its called equity RISK premium (ERP)…..I mean SPY usually grows its earnings….……but not always….thats the risk..….we are about to enter a period IMO where we will be/are printing nominal falls in earnings…..and very large REAL falls in earnings……ask SPY owners who bought at 4800 with say bottom up earnings now for SPY sitting at around 210 about it….they have a 4.375% earnings yield on that purchase price….in a ~5% inflation economy…not good…...& where 3 month treasury’s have a 4.9% yield with NO risk….and where the direction of travel for earnings is likely not good….yes time will make the math work…but no guarantees…..what are corporate tax rates & earnings going to be in five years with AOC as President?

 

I’ve seen people talk about how historical ERP figures…….are dumb, cause they’re a point in time and static and compare apples (fixed coupon) to oranges (equity ‘coupon’)….as companies grow their earnings / ‘yield’..….and bonds don’t……my rebuttal to that thesis…..is exactly what market participants don’t know that?……..the historical ERP is very valid measure of valuation as EVERYBODY understands one is a fixed coupon and the other is not….the variable-ness of the equity coupon above the bond coupon….is the RISK…most of the time the E goes up…but not always….how much investors historically wanted in compensation to take that risk is a very valid benchmark across time……it is in some respect a measure of optimism and pessimism…..exuberance & fear….its the only thing that matters but it does matter.

 

 

[vinod1]

3 hours ago, changegonnacome said:

 

You’ll need to be a bit clearer on that one cause it makes no sense - are you saying stock ‘yields’ live in a universe where they aren’t subject to inflation pressures/adjustment…..or somehow they are guaranteed by dictate to adjust upwards always to provide a guaranteed real return for the purchaser like TIPS are over inflation……that’s big leap & it assumes perfect pricing power…..and ignores why its called equity RISK premium (ERP)…..I mean SPY usually grows its earnings….……but not always….thats the risk..….we are about to enter a period IMO where we will be/are printing nominal falls in earnings…..and very large REAL falls in earnings……ask SPY owners who bought at 4800 with say bottom up earnings now for SPY sitting at around 210 about it….they have a 4.375% earnings yield on that purchase price….in a ~5% inflation economy…not good…...& where 3 month treasury’s have a 4.9% yield with NO risk….and where the direction of travel for earnings is likely not good….yes time will make the math work…but no guarantees…..what are corporate tax rates & earnings going to be in five years with AOC as President?

 

I’ve seen people talk about how historical ERP figures…….are dumb, cause they’re a point in time and static and compare apples (fixed coupon) to oranges (equity ‘coupon’)….as companies grow their earnings / ‘yield’..….and bonds don’t……my rebuttal to that thesis…..is exactly what market participants don’t know that?……..the historical ERP is very valid measure of valuation as EVERYBODY understands one is a fixed coupon and the other is not….the variable-ness of the equity coupon above the bond coupon….is the RISK…most of the time the E goes up…but not always….how much investors historically wanted in compensation to take that risk is a very valid benchmark across time……it is in some respect a measure of optimism and pessimism…..exuberance & fear….its the only thing that matters but it does matter.

 

 

 

You are slaying a strawman that no one is arguing about. 

 

Over the long term earnings of companies in the economy as a whole do better than keep up with inflation. Please do note the two points I bolded and underlined. 

 

Nothing is guaranteed. Earnings do not increase in lockstep with inflation. Profit margins go up and down. Inflation or deflation happens. But over the long run, corporate earnings as a whole keep up with inflation and then some. PE multiples go up and down. That is a separate factor.

 

The point I am making is, you don't compare corporate earnings (which go up) and its yield with bond market yield which is fixed. This is exactly the error made by the investment community as a whole until the 1950s when they used to compare dividend yield of the market with bonds. You can read more about this if interested. 

 

When someone says "earnings yield" of stocks as an approximate return, they mean real return not nominal return. For bonds, the yield you get is the expected nominal return. Both assuming no changes in valuation. Now you do not go about comparing these two as if they are similar, they are not. This is so widely understood and utterly uncontroversial, I am surprised that I need to highlight this.

 

Vinod

 

 

 

Edited April 9, 2023 by vinod1

[vinod1]

A good paper that deals with some of this is, Equity Risk Premiums (ERP): Determinants, Estimation and Implications - The 2023 Edition

 

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4398884

[Santayana]

46 minutes ago, vinod1 said:

Over the long term earnings of companies in the economy as a whole do better than keep up with inflation.

How much does survivorship bias affect that statement? 

[vinod1]

5 hours ago, Santayana said:

How much does survivorship bias affect that statement? 

 

Not much. Unless you are talking about world ending events not happening. In which case it does not matter, what the stock returns were.

 

Look at every single country in the world with stock markets and look at the returns. Well, we have that. Read 101 years of stock returns but Dimon, et all. 

 

Say inflation is 10,000% or prices increase 100 fold. 

 

What happens?

 

Corporate revenues increase roughly 100 fold. It has to, otherwise there would be no inflation. We are looking at the two sides of the same coin.

 

Lets say profit margins get cut in half and PE multiples get cut in half. You end up with some fraction of your wealth. Stocks would benefit from some real growth that is occurring and the debts they take gets wiped out (thanks to bond investors).

 

Bond investors get wiped out.

 

This is what happened in other hyper inflation episodes which are an extreme case.

 

So there you have it. In the next to worst case scenario (worst case being economy totally destroyed as in total nuclear holocaust or a meteor wiping out earth, communist takeover), stocks are still the best investment compared to bonds. Equity premium is actually pretty high in this case!

 

Vinod

 

[TwoCitiesCapital]

24 minutes ago, vinod1 said:

 

Not much. Unless you are talking about world ending events not happening. In which case it does not matter, what the stock returns were.

 

Look at every single country in the world with stock markets and look at the returns. Well, we have that. Read 101 years of stock returns but Dimon, et all. 

 

Say inflation is 10,000% or prices increase 100 fold. 

 

What happens?

 

Corporate revenues increase roughly 100 fold. It has to, otherwise there would be no inflation. We are looking at the two sides of the same coin.

 

Lets say profit margins get cut in half and PE multiples get cut in half. You end up with some fraction of your wealth. Stocks would benefit from some real growth that is occurring and the debts they take gets wiped out (thanks to bond investors).

 

Bond investors get wiped out.

 

This is what happened in other hyper inflation episodes which are an extreme case.

 

So there you have it. In the next to worst case scenario (worst case being economy totally destroyed as in total nuclear holocaust or a meteor wiping out earth, communist takeover), stocks are still the best investment compared to bonds. Equity premium is actually pretty high in this case!

 

Vinod

 

 

Stocks are better than bonds in hyperinflation. They're still worse off than most real assets. 

 

In more moderate inflationary environments, like the 1970s, bills and notes did better than stocks (precisely because stocks are long duration assets).  I'd imagine many real assets did as well but am only certain of energy. 

 

Most bills/notes/bonds outperformed most stocks last year too. Jury is still out this year, but looks increasingly in favor of bills/notes/bonds if we are headed into an recession at 18x falling earnings while bills/notes pay 4.5-6.5% pending spread and credit quality. 

 

Stocks are ONLY good in modest inflationary environments. There are better asset classes to own in just about any inflationary environment where inflation consistently exceeds 4%. If it's between 0-4%, stocks are what you want to own. 

Edited April 10, 2023 by TwoCitiesCapital

[Santayana]

44 minutes ago, vinod1 said:

Look at every single country in the world with stock markets and look at the returns. Well, we have that. Read 101 years of stock returns but Dimon, et all. 

Right, but market returns are very much affected by survivorship bias. Lots of companies fail, get dropped from indexes, and then we don't see their poor results in the historical record.  Look at a list of Dow Jones components from 50-60 years ago, many of those companies clearly didn't have earnings that have outpaced inflation or they would still be with us today.

Edited April 10, 2023 by Santayana

[vinod1]

6 minutes ago, TwoCitiesCapital said:

 

Stocks are better than bonds in hyperinflation. They're still worse off than most real assets. 

 

In more moderate inflationary environments, like the 1970s, bills and notes did better than stocks (precisely because stocks are long duration assets).  I'd imagine many real assets did as well but am only certain of energy. 

 

Most bills/notes/bonds outperformed most stocks last year too. Jury is still out this year, but looks increasingly in favor of bills/notes/bonds if we are headed into an recession at 18x falling earnings while bills/notes pay 4.5-6.5% pending spread and credit quality. 

 

Stocks are ONLY good in modest inflationary environments. There are better asset classes to own in just about any inflationary environment where inflation consistently exceeds 4%. If it's between 0-4%, stocks are what you want to own. 

 

Literally a sample size of one, from which you are drawing a very broad conclusion. You might as well make a similar statement "When a Chinese spy balloon crosses continental US, stocks do xxx". 

 

There are many things going on in the 70s and cherry picking time periods does not make for drawing much of any conclusions. Small value too did very well in the 70s. 

 

Except during massive deflation, which means falling revenues across the corporate sector, when bonds are going to be far superior to stocks, in all other cases, stocks are always going to do much better compared to bonds. If PE's go above 40, then it might take a reeeeeelly long time, but even then they are going to beat bonds at 3 or 4%.

 

Vinod