Making sense of the markets this week: October 2 Oct 1st

Bears are beating the bulls this year, but don’t bulls always win?

As share prices continue to fall faster than earnings in almost every country, at some point investors have to say: “OK, things are bad, and in the short term, they might get worse—but these assets and future earnings streams are still worth a lot of money, right?

“Just how much are the assets and future earnings streams worth?” is the real question, when it comes to determining the appropriate current value for a company.

The two charts below were released by Yardeni Research and they illustrate just how low valuations have sunk, relative to future earnings.

Source: yardeni.com

Source: yardeni.com

I mean, you know it’s rough times when investors are pricing the average P/E (price-to-earnings ratio) of the Big Six Canadian banks at close to 9x…