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Strategies & Market Trends : Value Investing

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To: kolo55 who wrote (56)	12/9/1996 11:34:00 AM
From: Greg Jung	of 78742

If we have indeed repealed the business cycle here in the US then there is little risk in the stock market. Go ahead and calculate the stock value by next-year's earnings estimates, multiply by current-year growth rate, add inflation etc. Stocks in the S & P have what, an average multiple of 24? When the overall economy has growth of 2-3%, inflation at 3-4%, something has to budge. The question for your cash today is, when one of these PE=24 companies miss an earnings report, maybe even two, what is the stock going to be worth, and at what point would you open your wallet and buy in? Also when the stream of earnings reports are not so rosy causing all anticipated earnings to fall, which of these stocks can consistently buck the trends even while suffering the general market drop?

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