Photo: Contrarian Edge
Stock prices have more than doubled since their lows of March 2009.But when you look at the stock market since 2000, prices have effectively gone nowhere.
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“12 years into this sideways market, valuations are still 30% above the historical average, while in 1982 they were about 30% per cent below average!” he writes. “Also, historically, stocks spent a good amount of time at below-average valuations before sideways market turned into a secular bull market.”
In a presentation he recently gave to the CFA Society of Atlanta, Katsenelson closely reviews the history of secular bull and secular sideways markets.
In addition to pointing to above-average valuations, he argues that this current sideways market can persist because of higher taxes, lower government spending, heavy global debt, historically high profit margins, and overcapacity in China among other things.
Thanks to Vitaliy Katsenelson for giving us permission to feature his presentation.