OUZILLY, France – “There’s a word for it,” said Elizabeth…
“When you just realize that there is nothing you can do. You feel a sense of relief, and peace. You just give up.
“That’s the way I felt when I was going over the horse’s head.”
We are in the hospital at Montmorillon, sitting at Elizabeth’s bedside. She was jumping a horse on Saturday and was thrown off.
Dizzy, disoriented, but in keeping with the honor of the cavalry, she got up, dusted herself off… and mounted her horse again.
Later, she collapsed in such pain that she lost consciousness and was taken by ambulance to the hospital, with her husband close behind.
We probably could have called in sick this morning. But there is not much to do in the waiting room of an emergency room; we might as well catch up on the financial news.
Alas, there is not much this time of year.
Last week, we reported that all three most widely watched U.S. stock market indexes – the Dow, the S&P 500, and the Nasdaq – had hit simultaneous highs. It hadn’t happened since 1999.
Now, a Bloomberg headline tells us: “Tech Dominates the S&P 500 Like No Time Since Dot-Com Bust”…
Don’t look now, but technology companies are exerting more control over the U.S. stock market than any time since the Internet bubble.
Fueled by three-year rallies in which Microsoft and Alphabet [formerly Google] doubled, Amazon.com tripled, and Facebook surged fivefold, computer and software stocks have increased to almost 21% of the S&P 500 Index’s value, near a 15-year high.
Valuations are high too…
As we’ve been reporting, only three times in its history – in 1929, 2000, and 2007 – has the S&P 500 been more expensive relative to the past 10 years of earnings (the so-called CAPE ratio).
So, we’re in rarely explored territory.
Most likely, a stock market bust. That’s what history suggests.
Never before have investors had so much support from the central banks.
It will probably result in more records broken – but only after a stock market sell-off causes the feds to panic.
No Broken Bones
Meanwhile, back at the hospital…
Fortunately, the X-rays show no broken bones or internal organ damage.
And Elizabeth has already recovered her sense of humor… if not her mobility.
Medical care here in France is almost free. It is a single-payer system. About 80% of all expenditures are covered by the government.
The French complain about it. But from our limited experience, it seems to work remarkably well.
France spends roughly 50% less of GDP on health care as the U.S., the world’s highest spender. And the French have a longer life expectancy.
According to the World Health Organization, the French rank ninth in the world… living to an average of 82.4 years of age. Americans, by comparison, rank 31st in the world (one place ahead of Cuba and one place behind Costa Rica). We live an average of 79.3 years.
We stayed in the emergency room until 3 a.m. on Saturday night.
It was not at all like the emergency room at Johns Hopkins Hospital in Baltimore, where so many shooting, stabbing, and beating cases are treated that the Army used to train its field doctors there.
Montmorillon is a small town. The hospital here is fairly new. It is clean, well-organized, and quiet. No sirens whined on Saturday night. No shooting victims. No doctors yelling orders to nurses and technicians.
Instead, it was very calm.
State of the Art
There was only one other patient – an old man who had fallen from his bicycle.
He was dressed in shabby clothes. He was dirty. He talked almost constantly, often repeating himself. He sat on a gurney and got up occasionally to look out the door, holding his pants up as he walked.
“Did you have any alcohol before your accident?” the doctor asked.
“No… nothing… just a glass of wine.”
“Just one glass?”
“Well… a couple…”
“Only a couple?”
“I don’t remember… I don’t count them…”
The doctors and nurses are courteous and professional. Wires, screens, scanners – they work with all the paraphernalia of state-of-the-art medicine.
We were invited to stand behind the screen and watch as Elizabeth had her bones scanned. The scanner head was articulated so it could take pictures from different angles, as the patient lay immobile on the table.
We watched on the monitor. It was a relief to see that none were sticking out in inappropriate ways.
“We have a lot of riding schools in the area,” the technician confided.
“About once or twice a month, we bring in someone who has been roughed up by a horse. Most of them are young people. They recover quickly. With older people, it’s a bit harder.”
Elizabeth grimaced… then smiled.
“Yes, a friend warned me that I should stop galloping and jumping. I probably should have listened.”
BY CHRIS LOWE, EDITOR AT LARGE
Below is a chart of the S&P 500’s CAPE ratio.
Like a regular price-to-earnings (P/E) ratio, it looks at stock prices relative to earnings.
This helps investors determine how cheap or expensive stocks are.
But instead of factoring in only the past 12 months of earnings, like the regular P/E ratio, the CAPE ratio factors in the average of the past 10 years of earnings and then adjusts for inflation.
This helps “smooth out” year-to-year swings in earnings, which can skew readings.
And for this reason, it’s the favorite valuations measure of Nobel Prize winning Yale economist Robert Shiller.
As you can see, the last three times in history the CAPE ratio has been this high or higher – 1929, 2000, and 2007 – preceded three of the biggest stock market crashes in history.
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Lots of great feedback today in response to Bill’s more recent skewering of the two leading 2016 U.S. presidential candidates – “Sorry Dems… Hillary Is No Better Than Donald.” Seems as though Bill has outraged both sides of the political aisle once again…
You have clouded judgement. Here we have Hillary Clinton, the most corrupt politician to ever run for the White House – an unindicted felon whose corruption runs all the way to the top of the FBI to the top of our Justice Dept. Because of this, for those that have half a brain, realize the U.S. truly has no justice anymore… all due to the corruption of the Clintons that has been plaguing our country for 20 years.
And all you can do, instead of highlighting this most serious concern, is talk about myths! Wake up or go back to your ranch and cancel my subscription.
– Justin M.
You must have eaten some bad food at the party the other day. Hillary is so much worse than Donald you can’t even make a comparison.
You also need to re-read the Koran. Islam is not compatible with our Republic. You know it. You are trying to be politically correct.
– Bill P.
You say you favor “lost causes, diehards, and underdogs.” Do you also favor the incompetent, the narcissist, the irrational, and the exaggerator? Would you hire such a person in your organization?
The issue in this election goes beyond political policy. As a country, failed to identify the limitations of G.W. Bush and, as a result, suffered the worst policy mistake this country ever made.
We cannot afford to make a mistake in evaluating the mental ability of a potential president again. Policy is not the only issue this time. We need someone who is rational to lead the country through the very dangerous future.
– Edmund S.
You have said “Hillary no better than Donald.” I say Hillary is worse than Donald! Look at what she has done. Besides that, I believe she is part of the Deep State.
The Donald may not be as conservative as some of the Republicans, but he sure as heck ain’t a liberal maniac like Hillary. The only worse one would be Bernie, but at least he was honest about who he is.
– Diane V.
In the past I always have enjoyed your articles very much, but lately, looks like you have pleasure in comparing Hillary with Trump. How could you do that? Hillary is not a saint, but to compare her with that monster, is like compare a LADY with a PIG?
I am a Democrat. But now this is a lot more serious, and there are a lot of Republicans that do not know what to do! Trump is very dangerous and really just anybody will be better than him. He is a crazy person with a lot of money, and he just will like to be like “The Emperor of the World.”
Please, try to help this country in a positive way!
– Martha G.
“The ancient Greeks believed there was no better way to die than in battle. Dying in battle gave a kind of honor and immortality that you couldn’t get otherwise.”
Sounds like a winner of an idea to me – let’s have Hillary and “The Donald” fight to the death. That way, even if we lose in one respect, we win in another.
And what about honor? You know, in 19th century Japan, a loss of honor required ritual suicide to absolve the family of shame. I think we should make these two honorary Japanese. That would be a win for all of us!
– Bill D.
In Case You Missed It…
Bill’s warning about the sinister organization that truly controls America is making lots of waves.
The oval office… the economy… the money in your very own wallet… they’re all controlled by the Deep State. And very soon, this shadowy group will send America spiraling into an irreversible crisis.
To learn how you can protect yourself, watch Bill’s latest message.