The Wall Street Waltz: 90 Visual Perspectives, Illustrated Lessons From Financial Cycles and Trends, Revised and Updated Edition

PART 1

STOCK MARKET VISUALIZATIONS

People who tell you they've got the stock market figured out, lock, stock, and barrel, are nuts. And anyone who tells you that any one stock market indicator is all-powerful in predicting the market's movements is doubly nuts. That's why this book has 90 visualizations covering a tremendous number of phenomena. But if there is any one stock market maxim you should hold in the highest regard, it is to avoid stocks when they're overpriced. Some folks overpay, and others hold onto well-bought stocks that have risen to become overpriced. The results are almost always sorry.

Perhaps the main reason people overpay and overstay is that they have little or no perspective on value. To gain some of that overview, you could read dozens of books, take investment classes, and observe the world for years. Or, you could spend about an hour with the hundreds of years' worth of data in the first 11 visualizations in this part.

Stock Market Strategy

The first two charts give you the stock market's price/earnings ratio (P/E) for the last hundred years. You learn in a hurry that the market was always a good buy when average P/Es were below 10. You will also learn that when the market's P/E has been above the mid- to high-teens, disappointment has usually followed. Were there exceptions to that rule? Of course! One of the beauties of the Wall Street Waltz is that every step has an exception.

That's where the other visualizations come into play. They collectively provide ...