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Politics : Ask Michael Burke

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To: valueminded who wrote (61698)	6/8/1999 2:17:00 PM
From: eWhartHog	Read Replies (1) of 132070

Chris, <<1. how many years do I have to wait before my 1000$ invested in the SP is worth the same as my 1000 investment in the bond (assuming all earnings are reinvested at the 10% earnings growth rate and returned to me as a return on capital at the end of the time period)>> Is this a trick question? $1000 of stock is worth the same as $1000 of bonds. The time to wait is zero years. <<If I get 7% on a aaa rated bond and the marketeers begin with a SP pe of 33 and earnings growth of 10% per year. Then:>> How many years will it be before S&P profits exceed the entire US gross domestic product if profits grow at 10% in an economy growing at 4%? Assuming the market cap of the S&P 500 is equal to current GDP, which is in the ballpark, I make it to be 63 years. Cheers, John

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