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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: Haim R. Branisteanu who wrote (5422)11/13/2001 11:50:14 PM
From: Zeev Hed  Read Replies (2) of 99280
 
Haim, I usually look at the 10 largest in the NDX, most of them have positive operating margins. Many companies in the rest of the list have positive operating margins as well. One can argue if the current valuations are justified in view of these margins, but the market is really trying to decipher what will happen next year not last. If your choice is getting 2% on money markets, or 2% (and growing annually) as an internal rate of return (not dividends, but bottom line profits), some people will select the later due to potential growth. Since the current PE of the 10 largest NDX stocks is around 50 (well, maybe this week it is already 60), that is the same rate of return as money markets. At this point the internal dynamics of the markets and visibility of next year's earnings will probably have a greater influence on equity prices.

Zeev
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