Pithaly

Over centuries, across many stock markets in many great nations, 14x earnings has simply been the long-term average valuation for common stocks. Sometimes valuations are higher, sometimes lower, but they always oscillate around a secular mathematical average of 14x. While long-established historical validity is enough proof, this number is quite logical too.

The DOW traded at a stupendous 45 in the year 2000. Yesterday, it traded at 14 PE, which is the HALFWAY mark, from a secular bearish bottom at 7.

The Indian Sensex traded at 26 PE at it's peak of 21,000 or so.

It has bounced back from a PE of 16, which means that it is still above the HALF way mark.

With the fourth wave as per Elliot likely to complete in 1-1/2 years, guess the Sensex value at that point. 14, 12 or 8? Tea anyone? Read more on this article...