Originally Posted by
belgarion
Hey Hoop,
I pointed out quite a while back that the S&P500 and DOW hadn't been really giving great returns when the falling value of the USD was taken into account. I seem to remember you threw up some great graphs of the DOW et al when valued in currencies other than the USD. Any chance you could do this again or better tell me the source of the data?
I have a theory that its overseas money that is keeping US stocks up and the overseas money is waiting for the spend thrift US consumers to start spending. Once the US consumers start spending we'll see the average PER fall back to more "normal" levels. If it doesn't, as I don't think it will (most consumers' real incomes have been falling) then we'll see a correction. Probably about 12 months from now unless US unemployment remains stubbornly high and the overseas money may just take flight.
Thanks. (modelling this against another period to see whether this time it is different ... ;) )