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THE DOW, TOO, IS DUE FOR A FURTHER SHAKE DOWN |
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�"A very strong case can be made for lower US share prices when they are compared with European stock prices," writes Bob Chapman in The International Forecaster of February 16.� He bases that on the premise that European shares are only somewhat overvalued, and writes: "US stocks trade at 33 times earnings. The historic norm is 14.5 times, while Euro stocks trade at 19 times. American stocks trade at 3.3 times book value and offer an average 1.4% dividend yield, while in Europe stocks trade at 2.3 times book and yield 2.5%. The enormous differential is because US stocks are very overpriced and European stocks are somewhat overpriced. The multiples that both trade at and projected 2002 earnings are: the US 31 times and Europe 18 times. The level is closer but both won't be anywhere near these estimates. They'll be substantially lower." |
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In What Matters E-letter WM-50, I revealed how with 'pro forma' creative accounting, the top 500 US listed companies were able to report earnings of 42 percent more than that allowed by 'generally accepted accounting principles' in 2001. (PS6). If one adds this factor to the stock yield figures given by Bob Chapman, well, it suggests that US stocks may be trading at not 33 times, but more likely 45 times earnings! |
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It is on the basis of such hard facts that Bob Chapman, who is highly regarded as a market forecaster, predicted in his newsletter of February 9 that the DOW will end the year at between 4,500 and 6,450, from just under 10,000 today. The flight into gold will give rise to a price of� $500 an ounce, compared to today's price of still under $300. Silver will be $10 to $15 an ounce, and the dollar will drop in value against other currencies by a quarter to a third on today's prices. So Mr Yen, take note, according to Bob Chapman the dollar will more likely nose dive to around 1 cent per yen, rather than increase in value to 1.5 cents per yen, as you anticipate, in encouragement of the yen carry trade. |
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"We are probably in the biggest bear market of all time," writes Chapman. "You are about to witness the almost total destruction of the financial system accompanied by multiple foreign conflicts all over the world and revolution within the US." (PS7) |
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STRIPPED NAKED |
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Whereas Hitler had the support of most of the people of Germany till near the end, I expect public opinion to swing hard and fast against Bush in 2003. |
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As the naked truth about the rebelliousness and destructive mania (Freud) and the "invisible government forces" (Roosevelt) behind the 9.11 attacks surfaces through to ordinary folk in the US, the rogue boys are going to attempt to introduce martial law. The Americans will not take well to that. And you can bet your last dollar that they will find very innovative ways of expressing their discontent. |
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Like the 5,000 employees of Enron, who, having been stripped bare of their pension money, stripped down to the buff in a public square, in a in a creative, courageous response to their predicament - as you can see at http://www.rotten.com/naked-people . (PS8) |
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Freud will have been taking notes in his grave, I am sure. |
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In friendship, |
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Boudewijn Wegerif, |
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What Matters Programme. Folkhogskola Vardingeby ** |
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PS2:�� Source: http://www.wsws.org/articles/2002/jan2002/enro-j18.shtml, via one of Jean Hudson's excellent Earth Rainbow Network E-letters, which give a much wider coverage of alternative news and views than I am able to give. To subscribe, E-mail Jean - [email protected] |
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PS3 and PS4: http://www.zealllc.com and http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nb20020108a4.htm |
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PS5:� Source: http://www.fdic.gov/bank/analytical/largest/chart2.html - with thanks to Charleston Voice - |
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