Bill Gross writes this week's "Outside The Box Missive". I'm lifting this piece of it, because it lines up with my thoughts that there is a recalibration of p/e ratios in an era of massive de-levering. It is part of my theme of conventional wisdom fails with respect to the pricing of the market and using yardsticks (p/e ratios etc) that no longer are accurate. Click on the graphic to be transported:
My transgenerational stock market outlook is this: stocks are cheap when valued within the context of a financed-based economy once dominated by leverage, cheap financing, and even lower corporate tax rates. That world, however, is in our past not our future. More regulation, lower leverage, higher taxes, and a lack of entrepreneurial testosterone are what we must get used to – that and a government checkbook that allows for healing, but crowds the private sector into an awkward and less productive corner.