Retired CEO of CHIPPEWA PARTNERS, Native American Advisors, Inc., now managing the Parisian Family Office. A White Earth Chippewa, raised conservative, growing up in the poorest county in the U.S. on the Pine Ridge Indian Reservation, he began a Wall Street career in 1982. Always been, will always be, an optimist. In a world on a dopamine binge, this is his take on life from Ghost Ranch in MT, Pamelot, his TN farm or their home in San Jose del Cabo, Mexico.
Tuesday, March 06, 2018
2018. Pushing a decade off the lows.................
For what it's worth, here's my take..........
People responsible for 2008 financial collapse = No jail, $1 trillion bailout and a 'recovery' feel good story.
Today, there is a massive and unpayable $22 Trillion debt, there is at least $220 Trillion of unfunded liabilities and our 2018 deficit was $1.2 Trillion 2018. Facts, just the facts.
For over 100 years, the average Shiller PE for the S&P 500 was 16.
Since 2000, this historic average has been the FLOOR; the absolute bottom of the range. Even during the depths of the 2009 crash, the lowest it ever sunk to was 16. The floor used to be a PE of 8. The lowest point of the acceptable range has doubled.
The new “acceptable” average PE is now around 25. Stock prices are trading up to 50% higher without having to earn any additional profit. Indeed, the majority of the DOW 30 is making less money than they were 5 years ago. Yet the DJIA has marched ever upward.
Add in the practice of buybacks and you can see how easy it is to push prices significantly higher simply based on changing the perception of “value”, even with DECLINING revenue and profits.
The FED has over $4 Trillion sloshing around doing nothing for Main Street and everything for K Street.
The next one is going to be a doozy................