Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Bear Case and Historical PE Ratios

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From a Sloper this morning………

I know most Slopers lean towards the bear side, and for good reasons.  Many of of the reasons I have had for leaning to the bearish side has been proven over time to be false in the near term which has cost me dearly.  Longer term however, the truth is that no sustainable bull market ever began while the PE was over 20.  It will simply be difficult for me to become a bull until the PE fell below 10.  No sustainable bull market ever began without the PE dipping below 10.

What I have attempted to do below is to show what prices have done since the depression when the PE reaches extremes.  The top chart is the S&P and the bottom chart is the PE chart.  Obviously, when the PE’s are high it pays to invest in a much more guarded fashion while when the PE’s are low, it pays to become much more bullish.  


Where would prices need to pull back to bring the PE back below 10?  When the S&P bottomed in 2009 at 666, the PE ratios bottomed at 15.  Assuming we are entering a new bear market now at the end of QE2, and the market drops over the course of the next year or a little longer, the next touch of the trend line would be somewhere between 700 and 750.  The chart below depicts what this could look like.

Back in 2002, the S&P was around 800 and PE's were about where they are now in the 23.5 area.  My guess is that should prices come to the trend line, you will see PE's close to a bullish bottom but not quite.  It depends on how well you can interpolate the data.

POTW: Lulu Tripe

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I'm going to be starting a new feature on Slope called the Peeve Of The Week (POTW). I've even made a new category for it in the cloud – "Peeve" – so you can see the zoo-full of animals that live in my collection of pet peeves.

I'll kick it off with a simple one – the feel-good treacle that overpriced women's vanity retailer Lululemon slathers all over their shopping bags:


Let's sample a few of these life lessons that are – ironically – displayed proudly on these testaments on consumerism:

+ Stress is related to 99% of all illnesses: Really? Where did they get this information? I mean, if this is true, the billions being spent yearly by scientists around the world exploring the causes of cancer, AIDS, and other maladies sounds like a big waste of cash. Those same funds could instead by redirected into high-priced athletic apparel, reduce everyone's stress, and virtually wipe out the world's diseases. Am I right?

Live near the ocean and inhale the pure salt air: I didn't realize salt granules were airborne. In any case, this is a nice sentiment among the rich. For most of America, it's sort of like – well – pouring salt on an open wound.

Do one thing a day that scares you: What, like jump off a bridge? Play on a freeway? I think avoiding things that scares us is probably pretty healthy.

Friends are more important than money: It's probably pretty easy to embrace such a pious pronouncement when you're the founder of Lulu and worth gazillions of dollars. Friends probably aren't that hard to scare up for him either, I imagine.

Children are the orgasm of life: Ah, this is my personal favorite. Check in with parents of a screaming infant at 3 in the morning or the mother of rebellious teenagers. See which column they check when offered the choice between being with their children or having orgiastic sex.

Hey, I feel better already. Now go out there and buy some stretchy pants. You'll rid yourself of disease, and if you're of the right body type, you'll provide potential onlookers the opportunity to do something today that scares them.