This article explores the value of understanding and assessing the environment over your investment horizon. Market weather may be hard to predict, but market climate can be credibly determined.
Many people don't realize that recessions are relatively common and frequent. Before 1930, recessions occurred equally 1 to 4 times per decade. After 1930, recessions occur once per decade about a third of the time and twice per decade about two-thirds of the time. If history is a guide, we should expect 1 to 2 recessions each decade.
The word secular originates from a series of Latin words that mean an extended period of time or an era. It is actually closer to you than you might realize.
This is the second installment of a two-part article on P/E ratios by Ed Easterling. Ed's books, Unexpected Returns and Probable Outcomes, have our unqualified endorsement for anyone trying to understand the complex and often puzzling relationship between the economy and the market.