plateaus

[Doug Henwood <dhenwood@xxxxxxxxx>]

Mark Jones wrote:

> Bull markets aren't usually followed by plateaux, are they?

They can be. There was a peak in U.S. P/Es peaked at 15.7 in 1901 -
accompanied by lots of "New Economy" talk (see Shiller's Irrational
Exuberance for details) - but real prices stayed pretty flat for 15
years before a deep bear market set in. P/Es peaked in the early
1960s, and real stock prices stayed pretty flat until a deep bear
market hit in 1973. All you can say with confidence is that periods
of high valuation are typically followed by periods of suboptimal
returns, not armageddon.

Doug