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Thursday, December 02, 2010


tobin's Q update

doug short posts a series of long term charts of tobin's Q, calculated today from the federal reserve's z.1 release.

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.

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