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It is the splits that made the markets rally and fall with increased
volatility. Reverse splits will remove some of the volatility and reduce profit
potential from the indexes.
"Dorothy K. Carter" wrote:
> Bloomberg TV showed a chart of S & P and current P/E's based on lowered
> earnings expectations vs P/E's at March 2000 high.. P/E's were higher now
> even though stocks have collapsed giving further proof that stocks are
> still grossly overvalued and nowhere near a low of significance.. The next
> thing we'll see is a number of the companies that have had several stock
> splits will have to do reverse stock splits.. I can't wait to see stocks
> like ORCl & CSCO do reverse stock splits .. this will be part of the
> undwinding of the excesses seen during the bubble IMO
> ----- Original Message -----
> From: "Don Ewers" <dbewers@xxxxxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Saturday, September 08, 2001 10:48 AM
> Subject: Re: [RT] s&p .. Where did that cat go?
>
> > 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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> >
> >
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>
>
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