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Be VERY careful with this reasoning
My own company is on a HISTORIC PE of over 70 but forward (both we and the
market know roughly where earnings will be) of about 30 which is about the
right place.
The BIG problem with high PE arguments is that it relates only to the past
and the market knows a lot about future earnings.
Make no mistake many US companies are coming strongly out of a BAD earnings
period. I know this from my own personal experience, 1998 was a disaster
and 1999 is looking a lot better. Also, order intake in October and
November was a lot better than expected plus many of our business units are
runnning well ahead of 1999 forecast.
Doug Meakin
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> From: RJones2279@xxxxxxx
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: Re: Gen: Acting in harmony toward a common end. No problem.
> Date: Thursday, January 07, 1999 4:13 AM
>
> Hi Brent,
>
> Although I am English and have only a limited perspective on these
matters it
> seems that major factors in driving the US bull market in the last few
months
> is either the prospect or the actuality of corporate takeovers or
corporations
> buying up their own shares to enhance future eps ratios.
>
> As the pe ratio on the S &P 500 is now around 38 and with the probability
of
> corporate earnings slowing somewhat it seems to me only a matter of time
> before someone observes that the emperor really has has no clothes ( this
time
> anyway). All I can say is I wouldnt go long on the S & P right now nor
would
> I write put options on it( that is unless I had suicidal tendencies)
>
> Happy New Year
>
>
> Bob Jones
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