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Politics : Formerly About Applied Materials

AMAT 295.83

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Jan 6 3:59 PM EST

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From: Gottfried	8/29/2001 7:31:28 PM
	Read Replies (1) of 70976

e-mail from Dr. Ed [Yardeni]... Wednesday afternoon, August 29, 2001 COMMENT: I have some good news and some bad news. The good news is that the S&P 500 is no longer overvalued. In May, it was more than 20% overvalued. Since then, lower stock prices and a falling 10-year bond yield--while 12-month forward consensus expected earnings stabilized around $55 per share--corrected the valuation problem. The projected earnings number divided by the current bond yield of 4.8% is equal to a fair-value of 1146 for the S&P 500, just about where this index is currently trading. The bad news is that the third-quarter's earnings season is about to start, and it is likely to be as disappointing as was the second quarter. Furthermore, tax-loss selling, especially by mutual funds during September and October could be intense again as it was last year at the same time. The good news is that in this scenario there will be lots of cheap stocks to buy, especially in technology, retailing, and consumer finance industries. [snip]

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