10-11-2009, 10:08 PM
Vanraw Wrote:Value of the Dow has stopped being about real value along time ago. Its all emotion now.
I don't know if its all about emotion. I would say that the gyrations around the normal expectations of future earnings are emotional, but its not all about emotion. Emotion is just that delta between a realistic expectation of future earnings, and overly pessimistic views vs overly optimistic views of future earnings.
If it was all emotion, charts like this wouldn't swing up and down around some realistic PE. If you think about it, we invent something new every once in a while and think, "this is a new world, everything is different now, PEs of 30 are justifiable because future earnings are going to be amazing!" Then, we come back down from the clouds and realize, "all of this has happened before and all of this will happen again." (haha)
![[Image: Dow%2BYearly%2BNPE%2BGraph.jpg]](http://2.bp.blogspot.com/_i47TEqZoAbw/SayceDfPLyI/AAAAAAAAAEA/3QYBRHpafjk/s1600/Dow%2BYearly%2BNPE%2BGraph.jpg)
http://2.bp.blogspot.com/_i47TEqZoAbw/Sa...+Graph.jpg
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