Long Valuation Waves - The P/E Supercycle Revisited
We have written about it before, and we will write about it again, if only to remind ourselves. Stock valuations run in cycles, and right now we are on a downward valuation cycle. Stocks may rise, but will do so at a slower rate than earnings. SafeHaven posts a lengthy article here if you are curious. We have taken out their two charts and a key quote:
Like this article? Why not try out:
Like great ocean waves, valuation waves run sequentially. After a valuation trough, like 1982, the main valuation wave starts sweeping into shore over the next 17 years or so and ultimately drives stock prices to very high levels relative to their earnings, the valuation crest like we saw in early 2000. But after this valuation crest passes, the valuation wave continues on and valuations relentlessly fall for 17 years or so down its backface until the next valuation trough. It is these receding valuation waves that create secular bear markets.
