BALTIMORE – After a year of wandering the globe, we are back in the homeland… and ready to turn in our passport.
Travel can be fun. It can also be “broadening.” But the most interesting thing about it is not so much what you find out about other places. It’s what you discover about your home.
You return to the land you once knew, as T.S. Eliot put it, and know it for the first time.
So, we are ready to rediscover Baltimore – a place where children refer to handguns as “school supplies.”
And what’s this?
Judging by yesterday’s mailbag, many of our dear readers are Sarah Palin fans. Several helped us decipher Ms. Palin’s gnomic remarks about Donald Trump, which we covered in Tuesday’sDiary
. Several more cancelled their subscriptions.
They must have thought our admiration for the former Alaska governor was insincere. [For more Palin feedback, check out today’s mailbag below.]
No Shame in Cash
But, let’s move on…
First, we return to questions put to us in Mumbai two days ago.
“What should an investor do?” asked an old man in a Nehru jacket.
“Should I stay in the stock market? After all, staying in the stock market always seems to pay off over the long term. Or should I move to gold and cash?”
We have been telling people there is “no shame in staying in cash” until the market finds a bottom.
If we’re wrong and prices shoot upward, we will miss the upside. But the risk of missing substantial gains seems slight. Earnings are going down. Almost all the signals from industry and commerce seem to be pointing down, too.
Meanwhile, U.S. stocks are still expensive.
The CAPE ratio looks at the inflation-adjusted average of the previous 10 years of earnings relative to stock prices. On that basis, the S&P 500 has been a worse deal only three times in the last 100 years.
Those were just before the 1929 Crash… the dot-com bust in 2000… and right before the 2008 meltdown – hardly auspicious precedents.
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