Frankly my dear, that record has gone with the wind
By Tony Jackson 2010-01-12
The 3D film Avatar is apparently doing well at the box office. Its $1.3bn sales to date put it in contention with the record holder Titanic (1997), at $1.8bn, and eclipse Gone With The Wind (1939), which managed $390m.
Or so the publicity tells us. But for anyone with an ounce of numeracy, this is nonsense. Adjusted for US inflation, Titanic’s sales were $2.4bn and Gone With The Wind’s getting on for $6bn. Add another pinch of numeracy and a further thought occurs.
Inflation apart, real incomes rise over time. If a thing cost $10 in 1900, the question is not just what it would cost today, but what it cost then in terms of available resources.
Applying that logic to box office sales, let us adjust for nominal US gross domestic product per head (a proxy for average wages), which I derive from measuringworth.com. By that yardstick, Gone With The Wind’s sales are worth a rather daunting $26bn in today’s money.
As with Hollywood, so with Wall Street. Today’s reader of JK Galbraith’sThe Great Crash 1929 might find the sums involved rather trivial, since the Dow Jones Industrial Average peaked back then at a mere 380. But do the same adjustment for nominal GDP per head, and the level was more than 21,000.
That is thought-provoking. It has become almost conventional wisdom today that the 2000 peak of 11,700 on the Dow was a record level of overvaluation, based on the twin measures of the 10-year rolling inflation-adjusted price-earnings ratio and the “q” ratio of price to book value.
But even adjusted for GDP, that was less than 16,000 in today’s terms. All the same, the 2000 peak was higher in that respect than any in history except 1929. It was higher even than the nominal 14,000-odd which immediately preceded the latest crisis in 2007.
What do these comparisons tell us?
First, distinguish between the two measures. The cyclically adjusted real p/e, developed by the US economist Robert Shiller, works on the basis of reported corporate earnings rather than broad economic activity.
The two are, of course, intimately linked. But corporate profits as a proportion of GDP fluctuate over time, depending on the bargaining power of capital versus labour.
Those fluctuations tend, naturally enough, to be mean-reverting, that is, they vary around a fairly constant average. Hence the calculation by Smithers & Co that the 2000 valuation peak was a record, based on deviation from the long-run mean. Our “real” valuation of stocks, based on GDP, is rather different. It tells us, in effect, what level of available resources the population has been willing to devote to ownership of corporations. The size of the quoted sector, of course, varies over time. But that need not concern us, since we are measuring an index rather than total dollars.
When we look at the reality of economic growth, the picture is one of false projections from past experience. Average growth in the US economy in the 1920s was 4 per cent a year, and in the 1930s half that. As ever, the 1929 market peak was just in time to be too late.
In the 1990s, which led up to the next market peak, US growth was a more subdued 3.3 per cent, a reflection of the fact that the rate had been slowing ever since the 1960s. But the figure for the 2000s looks like being being a close tie with the 1930s for the worst on record.
The best decade for growth, on the other hand, was the 1940s – a clear case, you might think, of a rebound from the depths and an encouraging signal for the 2010s. But when we recall the enormous impetus given to the US economy by the second world war, we might perhaps temper our hopes.
All that said, let us return to our basic premise. It is encouraging that in real terms, the market excesses of the past decade have not matched those of the 1920s. Equally, it no longer seems likely that the world will slip into a 1930s-style depression, though you never know.
But given the glum outlook for developed world profits in the changed conditions of the new decade, it remains less than comforting that the market should be as high as it is. Let us recall that in the other great bear market of the past century, in the mid-1970s, the peak in today’s adjusted terms was only about 7,700.
Look on the bright side. We were never daft enough, it seems, to pay the kind of prices for stocks our great-grandparents did. And if truth be told, I was never that keen on Gone With The Wind either.
作者：英国《金融时报》 托尼·杰克逊 2010-01-12
With The Wind)（1939年）创下的3.9亿美元票房收入黯然失色。
与好莱坞一样，华尔街的情况也是如此。如今阅读加尔布雷思(JK Galbraith)的《1929年大崩盘》(The Great Crash