Thursday, December 02, 2010
tobin's Q update
this chart is of absolutely no use to traders. however, for longer-term investors, i think there may be no other more useful context.
and the message is unambiguous -- since 1995, it has been an excessively risky time to be in or get into the stock market. and of course it has since been a rather wild ride, in which you would have been far better off to have been in government bonds.
of course, that hasn't been true of every cyclical iteration of tobin's Q -- see 1966-1982, for example. but it is nevertheless food for thought.