An interesting note from an analyst..<<For those of you who can't quite leave the value camp, an interesting note: Because profits have been rising, P-E's, or price-earnings ratios, have actually fallen. Yes, share prices also have an impact, but assuming prices are flat (and most stocks are slightly positive or negative for the year) it's the earnings that have caused the ratio to fall. At the end of 1999, for instance, 500 Index's P-E was almost 30. It's now around 26.8. Value Index's P-E was over 20 and is now around 17.8. Windsor, the classic low-P-E fund, is down to 13.7 for its component companies compared to 16.7 at year's end.
So, by at least one classic measure of stock market value, cheap stocks have gotten cheaper. That doesn't mean, however, that I suggest you buy them. >> |
