Arlequin

Fair value for the S and P 500

Today Denninger published this:
This is How Tops Are Made
An article detailing many of the concerns I have about the future of the economy and ending like this:

Eventually you have to sell products and services to consumers at a profit. The higher your "P" for a given amount of purchasing power the consumer has the more leverage you have to results on both sides, and this means that when the right person sticks up their hand and calls bull**** you're going to see 50% declines or more in price before you can reach for the mouse.

Count on it

Just because I think that debt levels in virtually every corner of the globe are too high and Price/Earnings levels are elevated doesn't mean that we will have a stock market collapse. Markets are frequently irrational. This bull market might continue for quite a while. This is a chart of the S & P 500 back to 1955:

Note that we are exactly at fair value.

Denninger was running a "DefCon" style light pole on his site some time ago. He had it at condition red for a while and eventually moved to "defcon 1" before removing the thing altogether. No explanation or apology, it just disappeared one day. Suffice it to say, I take his warnings with a grain of salt.