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Strategies & Market Trends : A.I.M Users Group Bulletin Board

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To: LemonHead who wrote (9554)	12/14/1999 2:50:00 PM
From: OldAIMGuy	Read Replies (1) of 18928

Hi Keith, I love the visual image of a bunch of unlicensed drivers barreling down the Info Super Highway! Thanks! That may have to go into a future newsletter!! I guess it has been about a year since you joined in the fracas here on this BB. Thanks for the time you've devoted to our efforts. I hope the info gathered here has been fruitful. Mr. Dreman talks about the wonderful feeling of being involved in a market with expanding P/E ratios. It's as near to a "No Fail" environment as one can get. He also does a beautiful job of describing how awful a shrinking P/E market is. As unexplainable as the wonders of the ballooning P/E are, so the terror of a collapsing P/E environment is also beyond explanation. I've now been involved in both. I started in 1971 investing my own money using the recent knowledge gained from my "Investments" class in college. From there through 1974 every time I put my pittance down on a stock, it abused me by falling below my last buy price. For a while I thought I was pretty clever averaging down as the prices continued to fall. However, after a couple of *YEARS* of the prices falling, it got a bit tedious! I just couldn't imagine what I was doing wrong. EVERYTHING in my college text was telling me that I was selecting the right stocks for the right reasons. Everything the stock prices were telling me was that I was doing everything wrong. Well, the Value Line P/E ratio was about 16.9 in 1969 and by the time it was all over in late 1974, VL's P/E had crashed to just 4.8!!! So, these things can happen. I don't know if the current market feeding frenzy could lead to another such period. There's at least some comfort in knowing that we've trimmed some fat almost every year from the P/E highs. It almost looks like the crash diets that so many of us start right after the holiday eating binge ends! Maybe these smaller corrections/consolidations are enough to do the trick. Best regards, Tom

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