Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: Gary M. Reed who wrote (1871)	10/26/1997 11:57:00 PM
From: Rock Fish	Read Replies (2) of 42834

On today's show, Bob bristled at the unmitigated audacity of a caller to question how he arrives at the price-to-earnings ratio of the S&P500. At issue was how the divisor, the "operatings earnings", was computed. The caller wondered how a amateur investor could arrive at this number. Bob wouldn't tell him, other than to state the fact that computing "the number" is what he does for a living, and that the caller could use his own best estimate if he chose. Bob was extremely perturbed when the caller asked if there was any way that he could estimate this number himself. So how do analysts like Bob estimate this number. Does he examine each of the 500 companys' balance sheets and decide individually which items to include/exclude from the earnings? This would be pretty straightforward after the fact, but to estimate nonrecurring charges and profits would be extremely difficult without a large research staff. I'm sure the big investment houses do this. Do people like Bob pay for the research, or do it themselves? -- RockFish

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