tag:blogger.com,1999:blog-6616959642391988608.post7810471379690335638..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: Putting the equity rally in perspectiveScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6616959642391988608.post-11707926891843884342009-09-16T18:01:57.352-07:002009-09-16T18:01:57.352-07:00You make a valid point, and you are basically desc...You make a valid point, and you are basically describing the Fed Model of equity valuation. I have used a modification of that theory myself in prior posts, which in turn is a variation on Art Laffer's model. It appears to do a good job explaining variations in P/E ratios or many decades, but it has been way off the mark for several years now. <br /><br />There is also a respectable theory Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-84370903888259849202009-09-16T17:23:11.024-07:002009-09-16T17:23:11.024-07:00I think 99% of your commentary is right on, but th...I think 99% of your commentary is right on, but this chart is off. It is necessary to compare identical P/Es to correct for periods of inflation. The 50's peaked about 20 P/E and 2000 peaked at 35+P/E and these highs should not be connected. The SP500 grows in line with the eps which is an avg 6.1% since the 40'sseekingtraceevidencehttps://www.blogger.com/profile/02479493983076211876noreply@blogger.com