Market Wrap Up November 11/04
by Martin Goldberg
Is
there anything new Under the Sun on Wall Street?
(Probably Not)
The latest rally has been impressive and the heavy trading volumes suggest that it may continue in the days even a couple of weeks ahead, but is it time to rethink whether this is a new bull market? If you wait, are you missing a once-in-a-lifetime chance to hop on a New Bull Market while it’s still early and get rich quick? Is it finally time to listen to the “everyone” who has been right for about two years? Is the next major move up? My opinion in a few words is that this is not a bull market, because: 1. Technical Charts – There is a preponderance of broadening patterns in sector, market, and company charts, which I have discussed in an article last April. The extent of the broadening patterns in the broad stock market has even broadened recently. 2. Fundamental Valuations – The stock market is arguably more expensive now than it was at the 1929 peak, which was also about the time that a president with the reputation for being “good for business” took the oath of office. While this tradable rally is likely to continue by most accounts, this is not a Bull Market. Tonight, I will discuss comparative stock market valuations between those of 1929 and the present, which suggest that our current stock market is expensive by historic standards and has valuation metrics similar to pre-crash 1929.
Below is a Table that summarizes the Dow Jones Industrials (DJIA) valuation parameters in 1928, and 1929. Data are from the “Selected Stocks Stock Picture” chart service dated October 1955 by M.C. Horsey & Company, Publishers purchased from L & S Trading. There are data on 20 of the 30 stocks from the DJIA of 1929 found in the “Selected Stocks” document, which are summarized in Table 1 below
Table 1 - Dow Jones Industrials in “Selected Stocks” M.C. Horsey October 1955
| Financial Results |
Valuations |
Dividend Yields |
||||||||||
| 1928 |
1929 |
January 1929 |
||||||||||
| Company |
Jan. 1929 Price |
1929 Price Peak |
EPS |
Div. |
EPS |
Div. |
Trailing |
Forward |
1929 Forward
Dividend Yield |
1929 Price
Peak
- Dividend Yield |
||
| Allied Chemical |
65 |
88 |
2.78 |
1.50 |
3.15 |
1.50 |
23 |
21 |
2.31 |
1.70 |
||
| Allied Can |
28 |
46 |
1.72 |
0.50 |
2.01 |
1.25 |
16 |
14 |
4.46 |
2.72 |
||
| American Smelting |
45 |
54.5 |
3.44 |
1.11 |
4.20 |
1.67 |
13 |
11 |
3.71 |
3.06 |
||
| American Sugar |
85 |
94 |
7.60 |
1.25 |
7.77 |
2.50 |
11 |
11 |
2.94 |
2.66 |
||
| American Tobacco |
90 |
135 |
5.58 |
4.00 |
5.76 |
5.00 |
16 |
16 |
5.56 |
3.70 |
||
| Atlantic Refining |
20 |
25.8 |
2.57 |
0.33 |
2.07 |
0.67 |
8 |
10 |
3.35 |
2.60 |
||
| Chrysler |
60 |
70 |
(1) |
3.40 |
1.50 |
2.47 |
1.5 |
18 |
24 |
2.50 |
2.14 |
|
| General Electric |
16 |
33.6 |
0.60 |
0.42 |
0.75 |
0.50 |
27 |
21 |
3.13 |
1.49 |
||
| General Motors |
45.8 |
40 |
3.02 |
1.90 |
2.72 |
2.15 |
15 |
17 |
4.69 |
5.38 |
||
| General Railway Sig. |
100 |
153 |
5.25 |
5.00 |
8.25 |
5.00 |
19 |
12 |
5.00 |
3.27 |
||
| International Harvester |
28 |
47 |
1.80 |
0.50 |
2.37 |
0.83 |
16 |
12 |
2.96 |
1.77 |
||
| International Nickel |
58 |
72 |
1.47 |
0.90 |
0.67 |
1.00 |
39 |
87 |
1.72 |
1.39 |
||
| Mack Trucks |
55 |
79 |
(2) |
3.91 |
3.00 |
4.39 |
3.00 |
13 |
43 |
5.00 |
3.48 |
|
| Paramount Publix |
30 |
38 |
|
1.00 |
0.83 |
1.45 |
0.75 |
30 |
21 |
2.50 |
1.97 |
|
| Radio Corporation |
70 |
114 |
3.33 |
0 |
0.33 |
0 |
21 |
212 |
* |
0.00 |
0.00 |
|
| Standard Oil (N.J.) |
29 |
42.5 |
(3) |
2.22 |
||||||||