Strolling through earnings for the nifty there has been a magnet at 400 share for the decade that proceeded the pandemic.
Up down plus-minus as the weights, reliance, hdfc, tech, and banks went so went the earnings estimates.
The price of the index was supported by compromised analysts' ability to say well at 30 times earnings the market is cheap. Thinking about that for a second, thirty times anything implies patience to pay for 30 years worth of promised earnings today.
Lifespans have increased. The nasty short and brutish of the ages before modern medicine and tonic liberally mixed with gin was 35 years. Yes thirty times earnings was a lifetime. Does that mean seventy-year lifespans imply that thirty times earnings is cheap?
At the depth of the greatest economic contraction in the journey from cro magnon to neanderthal to effete wine connoisseurs nifty earnings increased to 650 a share.
Close the global economy and companies without customers made 50% more while the world examined its eyelids through hazmat suits as charlatans promised a pill for insulin and the pandemic.
Multiply the fiction of 650 by 30 and anything under nifty 20 000 would challenge the lower bound of the stone age
Before Lehman in 2008 the Fed balance sheet muddled at under 1 trillion dollars filled with mortgage bonds that would have encouraged Rip Van Winkle to slumber on.
Lehman, wars, a pandemic, and 13 years later the Fed balance sheet at over 10 trillion liberally sprinkled around the world through dollar lines would be the envy of the Weimar Republic
Borrowing money had no cost. German banks promised to return depositors less than they dropped off and the depositors should be grateful. Treasury yields around the world tethered to zero. In the inverse world of lower interest rates that encourage investment in greater risk the multiple of earnings actual or imagined could be infinity.
The fiction lasts as long as the Fed buys 120 billion a month which it has promised to stop because the US debt ceiling needed to be raised in December to accommodate monies already spent and not to grease a printing press for the future.
In all cases, in the words of a great Dallas Cowboy quarterback Don Meredith, the last one out turns out the lights.
Goldman forecasts a sobriety test for July 2022. In anticipation, Goldman reported a quarterly trading loss of a billion if something because, well, they were getting short so a billion hit in 2021 multiplies to trust fund black holes in 2022.
Sell em if you got em
If you don't got em borrow em and sell em
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