Defining a Depression: Myths and Facts

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This is the same Jeremy Siegel who in 2006 wrote a WSJ article about how stocks were not overvalued ten years earlier, in 1996, (when Alan Greenspan gave his 'Irrational Exuberance' speech) because they posted good ten year returns after that time.
The stock market today is fairly valued based on a ten year trailing p/e ratios. Maybe Jeremy Siegel wants to rethink his 2006 conclusion and come back to us with another article?
In a way, you have to love Siegel's optimism about how the market should perhaps now carry a higher than historical p/e's because of lower transaction costs and better transparency/info. He has fallen into the 'this time it is different' quicksand.

Peter of NY 7:52AM March 13, 2009

"When you take inflation and dividends into account, it took less than eight years" (for the stock market to recover its 1929 losses)
Ok, and then what happened after that? What happened is that the stock market fell by 50% in 1937-1938. So if you cashed out eight years after the 1929 crash, you did well. But if timed it wrong and wanted your money 1,2,3,4,5,6,7,9, or 10 years after the crash, you did terribly. Little consolation.
The stock market bubble of 2000 was, by any measure, much bigger than the bubble of 1929. And yet after the brutal bear market of the last recession, the S&P 500
managed to recover 90% of its losses (when you take dividends and inflation into account) five years later, in 2007. Wow! Or, eh... , how come I am not impressed?
"if the stock market were to exactly adhere to a 1930s-like script, equities would provide a handsome return over the next five years." Yes, five years. Exactly five years. If you tried to cash out in year 1,2,3,4,6, or 7 you would be disappointed. And besides, everybody in the stock market just lost 1/2 of their money. They don't have any money to put into the market.

Peter of NY 7:00AM March 13, 2009

Restoring the uptick rule for shorting should bring back about a fourth of the recent losses. We're oversold due to unfettered and over-exuberant shorts.
There are more people in the market now, BUT, bear in mind the baby-boomers will be selling the market, not buying it, in order to have retirement income for the next two decades.
Corporate income tax should likely increase.
The old argument for decreasing these taxes to keep up with Ireland and Eastern Europe has tanked. Those low, low tax nations have tanked worse than us.

Muser of NM 5:14PM March 11, 2009