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Jerry thanks for the PE article below. Makes sense that the PE ratio could
actually rise(due to lower earnings, never thought of that.
I know EW does not work all the time, nothing does. In fact when it does not
it tells you something. An example is on the 60min bonds a complete 5 wave
pattern would have taken the bonds above 105-14 (and more likely to 105-23
to 28), but the pattern failed when 103-24 taken out. That tells you
something. The daily is still in play but the failure likely means the
waveC:4 is underway. That tells you something also. So either way it gives
me clues. I have Miners book but have not cracked it yet. His software is my
next purchase though I believe. Sometimes the patterns are not there and I
move on, since I have learned not to force a wave count as you said.
Again thanks for the article. I will try to send it back through the group
so others may see it.
don ewers
----- Original Message -----
From: "jerry swanson" <swanwoods@xxxxxxxxxxxxx>
To: <dbewers@xxxxxxxxxxxxx>
Sent: Thursday, February 15, 2001 12:43 PM
Subject: a note to don
> Don:
>
> The following appeared on the NY Times a couple of days ago; it was too
> large, perhaps, for the RT board, so here it is. Not sure if this is what
> you meant. I noticed that ndx took out it's 78.6% point of 2285 and so I
> thought the count was wrong, but it came back the next day. I bought
> Miner's book a couple of months ago and have really come to appreciate his
> approach. I particularly like the point he makes that EW only work about
> 50% of the time. The real significance of that is that they don't work
ALL
> of the time and that makes more sense than always trying to force
something
> into a wave pattern that doesn't work.
>
> best....
>
> jerry..
>
>
>
> As the red ink flows < in a somewhat hidden manner < the Nasdaq 100 is
> setting new standards for a price-earnings ratio by a major index. The
index
> is now trading at 811 times the combined earnings of the companies in the
> index.
>
> The surge in the price-earnings ratio means stocks in the Nasdaq 100 are
now
> exceptionally expensive on the basis of the companies' ability to actually
> make money.
>
> The ratio, which had never been above 165 before this year, reflects the
> fact that many Nasdaq companies are reporting huge losses for 2000, when
> their financial results are analyzed using generally accepted accounting
> principles, known as GAAP. That trend has been obscured, however, because
> many companies adjust the numbers in ways that make profits appear to be
> rising.
>
> "The disparity between the pro-forma headlines that companies emphasize in
> their news releases and the GAAP numbers has grown enormously over the
past
> month and a half," said Thomas Coleman, the head of research and risk
> management for Aequilibrium Investments, a London- based money management
> firm.
>
> The price-earnings ratio is based on the earnings, or losses, of each
> company in the index for the most recently reported 12 months. Those
numbers
> are weighted according to the relative weight of each company in the
index,
> which includes 100 of the largest companies traded on the Nasdaq market.
>
> The rapid rise in the price-earnings ratio, which stood at 127 at the end
of
> December, does not reflect any significant change in the price of the
stocks
> in the index since the end of the year. The Nasdaq 100 stock index ended
> last week at 2,261.77, down 3.4 percent for 2001. It is down 51.9 percent
> since it peaked in March, when the price- earnings ratio was 165, a
fraction
> of the current ratio. Had earnings stayed the same, the price-earnings
ratio
> would be less than half the 165 level.
>
> Instead, the soaring price-earnings ratio reflects big losses being posted
> for the fourth quarter of last year by a number of companies, in contrast
to
> profits or much smaller losses for the same quarter of 1999. Overall,
> profits of the companies in the index are down 90 percent since the index
> peaked.
>
> The nosedive in profits is tied to write-offs, the largest of which
appears
> to come from Excite@xxxx, the cable Internet company, which took a $4.6
> billion hit. Other Nasdaq 100 companies that took large write- offs
included
> Amazon.com, Yahoo and CNET.
>
> Most Nasdaq 100 companies have persuaded analysts to make their estimates
on
> earnings numbers that exclude certain costs, although the excluded costs
> vary from company to company. Most of the big losses being reported this
> year are in the areas that are not included in the pro forma, or adjusted,
> earnings that the companies want investors to focus on.
>
> In some cases, those losses may not reflect underlying problems. For
> example, many companies now take large charges when they make
acquisitions,
> to write off the value of acquired research and development work. Such
> write-offs presumably do not represent a real evaluation of the value of
the
> companies being acquired and as such are routinely ignored by many
analysts.
>
> Similarly, companies that acquire other companies using the so-called
> purchase method of accounting often end up putting a large value for
> intangible assets on their balance sheets, which current accounting rules
> require be amortized over up to 40 years.
>
>
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