Taking a line through Ridge's comments and your observations, I take it that you like old crotchety men!!!!
That said, I am not a supporter of RR, but I do consider what he has to say. That is to say, I note what my opponents are saying and then factor for anything that might be relevant or appropriate.
In this instance, I believe that RR is overstating his argument due to an underlying failure to actually understand much of what corporate America has done.
They have reduced corporate debt, rebuilt their Balance Sheets, cleaned out their accounts (ie: mirroring of revenue to costs, etc, recording of goodwill upon acquisition, capitalising expenditure, and so on).
In 2001, the great argument was with how corporate America was going to account for the new goodwill standards and the resulting P&L implications.
Narcissism, often considered a pre-requisite for any self-sulfilling CEO has largely been sidelined in the States through: 1) SEC crackdowns upon erroneous corporate behaviour; 2) accoufnting scandals exposed; 3) the SEC requirement for CEOs and CFOs to certify their acocunts; 4) closer governance scrutiny (still a work in progress); and 5) de-coupling of the CEO and Chairman's roles in an increasing number of companies.
The foundations for increased corporate performance are developing and overall, the US corporate cost structure is falling (ie: becoming more competitive).
Where RR may well be right is in with the markets getting slightly ahead of themselves. But, by and large, I do not consider thisto be particularly so.
On a historical p/e basis, the markets are over-valued.
On a forward p/e basis (based on known attributes), the markets are fairly valued, to a slight premium.
On a true business forward p/e basis (that is to say, actual company performance basis), the markets remain under-valued. But this will only be finally revealed once the upcoming results of Q1, Q2 and Q3 come out.
Clearly, the telco sectors in the USA and Europe are well and truly under-valued.
Witness, for example, Nortel beating Street estimates by >20%, and Ericsson beating the estimates by 3.1BSEK (or >125%), to record a 5.7BSEK adjusted Q4 profit (compared to Street estimates of 2.6BSEK). Similarly Cisco.
18 months ago, you could have owned Tyco for US$10. Now its US$27 and more, having cleaned up its corporate act.
My point, RR helps to remind us to keep our eyes and ears open and our minds uncluttered. That's taking a considered view. I do not believe, however, that RR practises all that he intends preaching (ie: his may well be a skewed mind, as opposed to a closed mind).
