> When such expectations gradually evaporate, the overvalued stock
> is like the cartoon figures running of a cliff, standing in
> thin air, and when they look down and discover the fact, then
> they fall.
Are you seriously asserting that P/E regresses to the mean?
Battipaglia claims that they are not overvalued because previous earnings models are just that: previous. For this you call him a liar? He might not be right, but are you sure? In fact, his claim goes more to the idea that these prices are _not_ based on hope for 'better times', but rather that the'better times' are already here.
> He says that stock values can remain stably at P/E ratios *far*
> above (is it 25-30 now?) what corresponds to reasonable returns
> on a financial investment *even* when the market does not any more
> anticipate further appreciation.
I think this statement gives you away as someone who thinks that there is structural support for a "reasonable" return on a stock. Other than past performance (which I'm sure is found in your "model"), do you have information to support this claim about the future?
That is: if a P/E of 30 is unreasonable, is 15 reasonable?
If a 9100 DJIA is overvalued, was it also overvalued at 7000? 5000? 34?
If you're a bear, I'll take the other side of that trade.
/jordan