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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 14 4:00 PM EST

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To: donald sew who wrote (23956)	8/27/1999 4:24:00 AM
From: PerryA	Read Replies (1) of 99985

To All: I lurk this thread for the intelligent discussion and historical perspective, and appreciate the many informative posters. One issue I have been mulling over for some time regarding overall market valuations is how a relatively small number of stocks can skew the market ratios. For example, based on Zacks data, the S&P 500 (forward) market multiple is roughly 27.2 (earnings yield of 3.7%), but the median S&P 500 market multiple is 17.9 (earnings yield of 5.6). Furthermore, more than 75% of companies in the S&P 500 have a multiple lower than the composite multiple (27.2). In short, I am interested in knowing whether the current level of skewness in market valuations is unusual (I assume it would be greater than normal due to many internet stocks with high valuations and little or no earnings) and what effect that should have on our overall market outlook. Regards, PerryA

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