>Said the cyberbroker to the fly. US stocks are way, way overvalued
>relative to their historical averages. And sooner or later, financial
>manias which aren't supported by a real economic boom (and for all the
>fireworks of the US stock market, real investment in America has pretty
>much stagnated throughout the 1990s, and growth rates have been miserable)
>come to a grievous end. This isn't to say there aren't good buys in the
>market -- just not in the US market. Those German/Swiss multinationals are
>a *screaming* buy. Japanese stocks are also a good buy -- don't expect a
>market upturn for another decade, but eventually Japan will become Asia's
>biggest rentier, and the Nikkei will have nowhere to go but up.
The problem with valuation measures is that the overvalued can always get more overvalued. The latest leg of the U.S. bull market started in 1991, with the P/E on the S&P 500 at 20.9, compared to a median of 13.6 (1871-1997). Of course, that was an extension of the bull born in 1982, when the P/E was a reasonable 8.6, not a newborn bull, but still....
For now, the U.S. is the world-almighty hegemon - almost everywhere. Ruth Reichl reported the other week in the New York Times that French cuisine has been deteriorating badly, while American cuisine, at least at the high end, keeps getting better. It used to be a favorite leftie sport to point out how short Henry Luce's "American Century" turned out to be, but maybe dead Henry is having the last laugh.
Doug