Re: Dow 36,000

John Clark (
Fri, 22 Oct 1999 11:51:51 -0400

Robin Hanson <> Wrote:

>I'm not sure what you mean by ""technical analysis here.
>(I presume you don't mean than you dislike analyses
>which contain numbers.)

By "technical analysis" I mean foretelling the price of stocks by means of curve fitting. At least astrology is more colorful.

It's true that the PE ratio of stocks are quite high historically and I can only think of two reasons to explain it.

1)The perception of risk in stocks as compared to bonds is

less than it has been.

2)The perception of earnings growth in stocks is greater

than it has been.

If you think these perceptions are correct then the high PE won't bother you (much). If you think the perceptions are not correct then despite its dismal performance over the last 20 years you should put your money into gold not DC area real estate. Real estate crashes usually accompany stock market crashes. That was certainly true in 1929, and after Japanese stocks tanked 10 years ago the grounds of the Imperial palace in downtown Tokyo were no longer worth more than the state of California.

John K Clark

PS: You could counter that it's equally absurd for to be worth more than the country of Norway, but I don't have any stock in