Salient to Investors:

Laszlo Birinyi said:

  • The market is now so dominated by institutional investors, hedge funds and service industries, that sentiment drives prices more than anything else, so predictions based on valuation data going back a hundred years are bound to fail. Recent developments in Amazon, Google, and Chipotle clearly show this is not your grandfather’s market.
  • “This time is different” and “greed and fear are constants” are only clichés.
  • Using cyclically adjusted P-E ratios going back to 1926 would have predicted the S&P 500 returning less than 1 percent a year in the decade after the dot-com bust instead of the actual return of almost 5 times as much.
  • 3 of the 4 biggest bull markets of the last century have occurred since 1982. The S&P may not be cyclical. If this bull market mirrors the performance of the 1990 bull market, then the S&P 500 will rise to 3,200 over the next 2 years.

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