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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 670.92

+0.1%

Nov 7 4:00 PM EST

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To: Vitas who wrote (34297)	11/27/1999 9:02:00 PM
From: Jurgen	Read Replies (1) of 99985

Vitas, thanks for the interesting post on valuations. I've been looking for something like that. i don't really understand this part: "..The discount formula then gives the present value of the income expected as [(1-20%)^10 -1] / [(-20%) X (1-20%)^10] = 42. This would be the P/E expected..." The discount factor of -20% makes sense, but i can't see how he derives the PE from that. The present value of the earnings expected in year n should be (1+20%)^n. I'm probably missing something. Any ideas ? Jurgen

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