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It appears that the gurus who run the game are now using cash flow models to
generate values. They still haven't come to the realization that a company
needs to make a profit to stay in business.
Don Ewers wrote:
> 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
> > >
> > > --
> >
> >
> >
> > To unsubscribe from this group, send an email to:
> > realtraders-unsubscribe@xxxxxxxxxxxxxxx
> >
> >
> >
> > Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
> >
> >
>
>
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>
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