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I have the historical long bond ratio calculated and will construct a chart
with it next weekend if SC workspace memory will permit. One of the major
problems with historical long bond data is that it is not "pure" as it
includes flower bonds and other pre-WW2 issues which approximate long bonds.
The 10 year bond used by AG in his valuation model was not issued prior to
1972. There is a basic fallacy in testing long term investment systems on
data which does not include most of the century's major bear markets along
with the bull markets.
Earl
-----Original Message-----
From: BruceB <bruceb@xxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Sunday, December 27, 1998 11:01 PM
Subject: Re: MKT S&P EYld/TBill Ratio et al
>-----Original Message-----
>From: Earl Adamy <eadamy@xxxxxxxxxx>
>
>>I think generally the charts and accompanying comments speak for
>themselves,
>>however a few comments seem to be in order. The purpose of using TBill's
is
>>that they are virtually risk-free - today's crop of investors appears to
be
>>convinced that there is virtually no risk in stocks because they will
>always
>>go up.
>
>Earl, I completely agree with the logic of comparing earnings to a
risk-free
>investment. I just think the 30 yr T-bond might give better results than
>the T-bill because it is more of a long term investment, as stocks are (for
>most people). From a default-risk standpoint they are essentially equal.
>
>Bruce
>
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