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--- In realtraders@xxxx, "Earl Adamy" <eadamy@xxxx> wrote:
> Are you suggesting that the DJIA is not generously endowed with
historically
> high PE's which far exceed the growth rate of company earnings? If
so, I
> disagree - starting right at the top, GE carries a PE of 35 with an
earnings
> growth rate of 16% and the charts strongly suggest that GE would be
> extremely fortunate to escape with another 15% hair cut to $38 and
that's if
> they somehow manage to avoid major defaults on all the industrial,
> commercial, and consumer paper they hold.
>
> Earl
Earl,
I have been following GE with great interest lately -- seems like it
may hold the psychological key to the Dow, NYSE, etc. As to
defaults, GECC has a remarkable willingness/ability to "restructure"
bad transactions into things which did not necessarily make economic
sense, but were more favorable to earnings. I worked for one of
their largest borrowers in the early 90s and saw it happen
personally. (I don't believe they still have fully recognized hits
they took in that era.) They also are good at parking earnings in
good times to recognize at their discretion in bad. Whether they
will be able to continue to play that game sufficiently remains to be
seen. Chart looks lower to me, FWIW.
Regards,
Chris
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