“Critics sometimes like to argue that the reading of late has been distorted because it includes the abysmal corporate earnings during the 2008-2009 crash. So I decided to exclude those, and just compare stock prices to the average of the past five years, rather than 10, to see how that affected the measure.
And, yes, it does. But it only cuts the reading from 31 to 25.5.
For reference, it’s only reached a level of about 25 on five previous occasions: 1901, 1928-9, 1966, 1996-2002 and 2003-2007. Each one ended with a crash.”
MK note: Diversify. . . . . It wasn’t that long ago that we were receiving inquiries from clients who had established a 10% to 30% portfolio position in the early 2000s between $270 and $600 per ounce. They wanted to know what I would recommend now that gold constituted 50% of their portfolios, and in some notable cases as much as 70% of their portfolios. Gold was trading then near the $2000 per ounce level. At the time, when we did not know if things were going to be worse or better, most opted to simply leave things as they were. The common refrain was ‘I didn’t buy it to speculate. I bought it to protect what I have.’ And, at the time (2009-2013) that is precisely what gold was doing for them.