March 5, 2009
Our President, the Stock Tout
The President on Tuesday told citizens of the world that stocks in the United States were a bargain. He said and I quote "the P/E ratio, the profit to earnings ratios are low." He was, I think, referring to P/E ratios used by everyone that stand for "prices to earnings." It was a breathtaking error born of ignorance. He is, by his own admission, not well-informed about market mechanics and has consistently, for over two years, disparaged capital markets and capital market traders and financiers. Moreover, since his tepid endorsement the market has dropped significantly. His statement is reminiscent of the famous claims by President Hoover in 1930 and President Roosevelt in 1935 that the market declines were over. Presidents ought to stay out of the market prediction business, especially when they know little and do not care to figure it out correctly in light of their other aims and goals.
March 5, 2009 | Permalink
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Do you mean "born of ignorance"?
Posted by: ChancellorsLackey | Mar 5, 2009 10:36:39 AM
We love it when you stand tall to pomposity and venerated mendacity.
We worry when you tend to show elitists tendacies.
Our Pres (who I did not vote for) - has a large enough hurdle to climb without us trouncing upon him - haughtily - when he "tries" to make a point!
Posted by: Laser Haas | Mar 5, 2009 8:16:47 PM
Umm, he said "What you're now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it." He never said "P/E ratio" or used profits TO earnings. Maybe he screwed up, maybe he was trying to explain it in simple terms to the American people. Either way, if you are going to make fun of his quote, please get it right in the first place.
Posted by: Roger | Mar 6, 2009 12:23:48 PM
If I were to take a guess, the profits to earnings ratio is probably 1 right now. Time to buy!
Posted by: Mike Rosemeyer | Mar 8, 2009 10:47:49 PM
Great post professor. Every trader I know still can't stop laughing at him. He sounded like a complete fool and he doesn't have a clue what he's talking about. I don't know what "point" he could have been making other than that there is nothing at all he won't stoop to meddle in.
Posted by: Methinks | Mar 9, 2009 5:19:19 PM
Anybody who speaks in public or teaches says dumb things occasionally. So what?
"...capital market traders and financiers...."
I'm really well informed on these issues and I trash these guys regularly, there is little integrity in the markets these days.
Speaking of integrity, when will the officers of ratings agencies be indicted? I'm waiting.
Posted by: save_the_rustbelt | Mar 10, 2009 6:46:13 AM