Re: [Fleckenstein] The Story of Bubblenomics

Sally Khudairi (
Tue, 21 Dec 1999 01:29:49 EST


In a message dated 12/20/99 21:00:46, wrote:

>At 03:39 1999/12/20 -0500, you wrote:
>>A friend of mine mentioned that even with all the insanity, we still
>>have only half the "bubble" of Japan at its peak (stocks are worse
>>than average but real estate is better).
>Could you unpack that parenthetical comment a little bit? Thanks 1E6.


At the peak of the Japanese bubble stocks were selling for over 80
times earnings. In effect, this is less than twice our current PE
(about 40) because of accounting and tax rules that encouraged
Japanese companies to defer earnings.

At the peak of the bubble, however, Japanese real estate prices were
unbelievable. Tokyo was worth more than the entire US. I don't
know the ratios but it's far more than twice our current prices.

My point was that, while our current stock market sure looks like
a bubble, it's still far from the most severe bubble the world has