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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: mishedlo who wrote (215875)1/21/2003 7:29:21 PM
From: patron_anejo_por_favor   of 436258
 
Here's a bold statement today from Jim Puplava:

financialsense.com

Stocks are more overvalued today than they were at the peak of the market in 1929. From a valuation perspective, the average P/E multiple has run between 12-14 throughout the last century. In bear markets P/E multiples have gotten as low as 7. Today the P/E multiple used by S&P, which is still not the bottom line but includes many more excluded expenses, is at 28. This equates to an earnings yield of 3.5%. For the Dow the P/E multiple is about the same at 28. These numbers don’t include the real bottom line but they are getting closer. This still doesn’t make stocks cheap.

However, stocks today are sold times forward earnings. That is where an even bigger fiction comes into play. Forget the 28-30 P/E multiples. Investors are told to look at forward P/E’s, which aren’t as high because of those miracle earnings. Well, guess what? There isn’t going to be any miracle earnings this year. You can forget about S&P earnings of $48-54. These are bogus numbers used to justify current high stock valuations. The simple truth of the matter is that stocks are overpriced. The reason is that earnings have fallen faster than stock prices. In my opinion, prices haven’t fallen as fast as earnings because of this charade of pro forma accounting and reporting. If investors were told what the real numbers were, stock prices would be much lower.
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