Quote Originally Posted by gapcap1 View Post
yeah, timing is everything. but, anyone acquainted with the triumphal trip of dimson, marsh, & staunton would convince you that the 50,000 fold rise since 1899 in the index was not due to unusual anomalies related to expectations, but was due to the return on capital of 15% and compounding . such a compounding is particularly alluring during times when the earnings price ratio and the return on capital are so much greater than the long term interest rate, as would be consistent with theory and the Fed model. someone will eventually, put their finger in the dyke, and the market will be bought. it's one of the immutable laws still left standing.
Don't disagree - only that a broader view of credit markets should be taken into account when using this kind of model