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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 671.910.0%Nov 14 4:00 PM EST
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To: Gottfried who wrote (27681)9/28/1999 5:57:00 PM
From: pater tenebrarum  Read Replies (4) of 99985
 
Gottfried, while your argument is compelling, what is worrisome about this NAZ p/e chart is the CHANGE it depicts that has taken place over the last few years. essentially we have jumped from a p/e of 29 in '95 to a p/e of 158 now. before '95 the p/e was considerably lower, but i would say that the premium p/e of '95 was deserved based on the fact that many tech upstarts list on the Nasdaq. however, when you see the rate of ascent on this chart you cannot help but get a bit nervous. with all due respect to the great prospects of many of the Nasdaq listed companies i do not believe that anyone can dispute the fact that most are horrendously overvalued. if companies with revenues of a few million dollars and no earnings are awarded multi billion market caps something has to be out of whack, no matter what their prospects are (aside from the fact that these prospects are as of yet mostly unproven).
i am well aware that no-one can tell the market what to do and these valuations may become even more monstrous. however, that doesn't change the fact that what is happening here has little if anything to do with fundamentals or reality. it is a bubble, plain and simple, induced by the Fed's wide open liquidity spigot in recent years.

regards,

hb
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