Caveat: May 19, 2012

The trend above suggests we will continue the secular bear market;  that is, the price of a stock will continue to decrease in relation to its book value.  This means, if you watch the  stock price, you miss what is happening as the familiar relationships will not work until the next bull market.

OK, let me try again. It doesn't matter if a company grows a little. the price of the stock will readily decline as people are backing off from high risk.  It is like the PE of tech stocks was once 50 and now it is 20ish.  People are not willing to pay a high multiple anymore, so a healthy company can still see the stock decline.

This is what is happening in the real estate market. No one believes in the ever-upward realty market, anymore, so the prices deteriorate.

Human nature is waiting for the bottom