Q factor

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Dec 10, 2008 9:39 am

Interesting read this morning.


http://www.bloomberg.com/apps/news?pid=20601087&sid=aKNSK0gYlqB0&refer=home#

Dec 10, 2008 10:42 am

Say it ain't so Joe!

Dec 10, 2008 11:01 am

Doug Henwood, in his book Wall Street, argues that the q ratio fails to accurately predict investment, as Tobin claims. "The data for Tobin and Brainard’s 1977 paper covers 1960 to 1974, a period for which q seemed to explain investment pretty well," he writes. "But as the chart [see right] shows, things started going away even before the paper was published. While q and investment seemed to move together for the first half of the chart, they part ways almost at the middle; q collapsed during the bearish stock markets of the 1970s, yet investment rose

Dec 10, 2008 11:04 am

Also this Russell Napier, is a bear market scholar, he only is helpful if the market is going to continue to decline, so I tend to discredit those people

Dec 10, 2008 11:29 am

Just thinking aloud here, but isn't the concern inflation, not deflation

 
Also, I found it interesting that M2 money supply (cash, checking, savings, CD's <100k, and retail money markets) is now at $7.92 trillion which is greater than the total market cap of the S&P 500 at 7.83 trillion.