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You are more than welcome to wait a few centuries to measure statistical
validity. The simple fact is that the pivots in the EY/TB ratio have
marked most of the significant price pivots for the 60 years of
available data. The ratio does a superb job of measuring the
relationship between earnings, interest rates, and price. It is not
intended to forecast tops and bottoms, but is intended to provide a
measure of how relaxed/stretched market valuations are. IMHO, the ratio
indicates that the market valuations are extremely stretched which
indicates greatly increased risk and that's all one should read into the
chart.
Earl
----- Original Message -----
From: "Phil Lane" <patterntrader@xxxxxxxxxx>
To: <eadamy@xxxxxxxxxx>; <realtraders@xxxxxxxxxxxxxxx>
Sent: Friday, March 31, 2000 6:56 AM
Subject: Re: [RT] Market outlook 2 of 2
> I think you're probably right, but this chart shows just a handful of
> occurences. The conclusions are not statistically valid without a
larger
> sample!
>
> fwiw, phil
> ----- Original Message -----
> From: Earl Adamy <eadamy@xxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Friday, March 31, 2000 5:08 AM
> Subject: [RT] Market outlook 2 of 2
>
>
> > Historical SP Earnings Yield / TBill Ratio chart attached.
> >
>
>
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