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Showing posts from March, 2009

Are there any bulls left?

Today's AAII (American Association of Individual Investors) bull and bear sentiment index are just another statistics that paint the bleak mood of markets. The Bears were over 70, an all time high level since the survey started 7/87, and the Bulls barely registered at 19, also a muti-year low. The difference between Bulls and Bears, a commonly used contrarian indicator based AAII survey, dropped below -50 (see the bottom panel of the chart), it only happened once in early October, 1990. Is the market bottom finally here? The bull-bear contrarian indicator has worked quite amiable in the past. If all the bulls have thrown in the white towels, we just might be at the bottom NOW.

Market P/E droped to single digit first time in almost 25 years

The broad market valuation, measured by trailing P/E of S&P500 index, for the first time since 1/1985 dropped below 10x today according to Bloomberg (see chart below; red line - P/E, yellow - price/book, green - price/sales and white - SP500). It looks like this negative momentum created by economic uncertainties and extreme risk reversion are still the dominate sentiments. We might be heading to 7-8x multiple soon. Talking about about insane and efficient markets!