Da Bears, Da Bulls continued ...

Continuing yesterday's discussion and finishing off the main points from Vincent Delisle's Strategic Edge Weekly: "Secular bull markets average 14 years versus 12 years for secular bears. From start to finish, the average price change during bear periods is negative 35% versus positive 546% in upward cycles. On average, earnings increase 191% in secular bull markets (start to end) and P/Es double towards the 20 times level. In secular bear cycles, earnings initially fall, but actually end at higher levels when Da Bear is officially over. P/E compression appears to be an important drag in the latter stages of secular bear markets, and unlike earnings, P/Es tend to contract throughout the entire bear market."

Bottom line according to Vincent and his team: "The earnings turn out to be somewhat equity friendly heading into the final stretch of bear markets, but P/Es are not. A new secular bull market is unlikely to unfold until P/E multiples can expand. On a 12 twelve month trailing basis, the S&P500 P/E currently stands at 14 times, versus a bear market trough average of 11 times."

GB