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Politics : Ask Michael Burke

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To: Richard Nehrboss who wrote (67019)	8/31/1999 8:43:00 AM
From: Mike M2	Read Replies (1) of 132070

Richard, you would be surprised how many companies with large share repurchase programs do not reduce the number of shares outstanding due to generous executive option grants. Nonetheless, your point is valid. Lets look at earnings I don't have the precise numbers handy but the market would have to decline 50-70% to return to 1929 levels. This does not even address the widespread use of aggressive accounting especially stock options giving companies the poorest quality of earnings in history IMO. Andrew Smithers did a study showing than if esops were expensed on the income statements the PE on the S&P would be 50% higher in 1998 so we are in the PE of 60 territory. The bulls have an answer for everything and many of their arguments are quite valid but the end result is the bulls tell us it's different this time. Mike

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