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Subject:  Re: The hocus plan: 4% from 100% FI? Date:  5/2/2003  4:38 AM
Author:  AdvocatusDiaboli Number:  105112 of 881729

Hocus says he wants to stay out of stocks until prices are closer to average valuations. The trouble is that by that time those stocks might be a lot more expensive to buy...

How's that possible?
Do you think that stocks will stay up in the air for the next decades so they will drag the average valuation upward?
Truth is, stocks have always swung around certain average valuations, like P/E 15 or so. Sometimes they were above, sometimes below.
There are probably fundamental economic reasons for this kind of valuation, like the return on a dollar invested in a company.
Why do you assume that we've now established a new higher level?
History is a tough opponent to beat. In all likelihood stocks will eventually swing back to far lower valuations, below the long-term average.
That would mean a steep drop, something like 40-50%, or alternatively an extended period of stagnation.
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