Why This Rally Is Really Different
Most investors are not impressed with the 29% gain in the Standard & Poor’s 500 Index (S&P 500) from the March 9 low. The consensus is that the sharp rebound in the stock market is just another bear market rally.
A Bear Is in Sight
Since this bull market began back in October 2002 or March 2003, there have been seven corrections of between five and ten percent. During each correction, I was absolutely convinced that the decline would be limited to between five and ten percent and that the bull market would then resume its upward momentum.
Overview of the Financial Markets
All valuation measures (price/cash flows, price/book, etc.) on the S&P 500 are at all-time highs except for P/E’s but we are at 2.5 standard deviations on P/E. Even median valuations are near all-time highs at a P/E of 19.