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agip
RE: Down goes the Dow

Jose Canucee wrote:


Ghost of Igloi wrote:

You use non-GAAP and Foreard PE. $122.48 (LTM GAAP S&P 500 EPS ) x 16.5 (historic multiple) = 2,020 (fair value), or about 35% lower than today’s close. The $122.48 number is inflated by high margins from low cost of funds, tax cuts, low labor costs, and low material costs. Those tail winds have likely peaked. Lastly, markets don’t just mean revert, they mean invert. I believe central bank liquidity driven speculation has so distorted the market the end will likely drive the S&P 500 down to 900-1,100.


I don’t understand “mean invert”. I googled it, but came up empty. Can you explain?


I'm sure he means that markets will not just go back to a median level of valuation but go well below it. Meaning the market will drop far more than just enough to get to normal valuations.

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