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IRA,
I remember those PE's, as I recall banks were at more like 4?
However, in this current market environment (of excess valuation) aren't we
"initially" likely to see rising PE's as earning fall even more dramatically
than the stock prices? Then after time the stock prices catch up and the
lower PE's materialize. My point is PE ratio's at this time may not tell us
as much as price to book, price to sales ect?
----- Original Message -----
From: "Ira Tunik" <irat@xxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Saturday, September 08, 2001 9:00 AM
Subject: Re: [RT] s&p .. Where did that cat go?
> At the last market bottom, after a bear rampage, the PE ratios were down
around
> 6. There is still a long way to go to reach these levels. Also the
majority of
> the mutual funds closed their doors during that period. We haven't seen
the
> massive redemptions yet or the collapse of confidence. Those that
increased
> their mortgage amounts to buy stocks haven't paid the piper yet, but the
number
> of bankruptcies are on the rise. There are two ways to reduce PE ratios.
One
> is to reduce the price of the stock and the other is to increase earnings.
Let
> us see how this works out. Ira.
>
> Earl Adamy wrote:
>
> > 1) The stock market gambling was in no way limited to the 30
something's, it
> > deeply infected the baby boomers, near-retired, and retired. These
people
> > talked of nothing but stocks at every gathering. Now they shut their
eyes to
> > what is happening in the market, don't want to talk about stocks, and
fully
> > expect that their winnings will be restored with a bit of patience.
> >
> > 2) The bubble was in no way limited to the NASDAQ, it was just most
evident
> > in the NASDAQ. The blue chips were and very much remain part of the
bubble.
> > By any gauge of valuation, the blue chips remain valued at historically
high
> > levels. We are now learning that much of the productivity and earnings
of
> > the past 5 years were fictional as extraordinary charges wipe away years
of
> > "profits".
> >
> > Attached find PE and Yield statistics from this week's Barron's Market
Lab
> > which suggest that the Dow Jones blue chips remain at lofty levels with
big
> > haircuts ahead in prices, earnings, and (especially) dividends:
> >
> > a) Market to Book on DJIA remains at nearly 8x
> > b) DJIA PE ratio is still 24+
> > c) PE ratio on DJTA is 348
> > d) DJTA dividends are nearly 5x earnings
> > e) DJUA PE ratio is 48
> > f) DJUA dividends are nearly 2x earnings
> >
> > Yes, the pendulum will swing far to the other extreme ... very far. I
expect
> > that when the smoke clears some years from now that sustainable dividend
> > yields on blue chip stocks will once again exceed the yields on long
term
> > treasuries.
> >
> > Earl
> >
> > --
>
>
>
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>
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>
>
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