hb, Selective "mania" is probably more appropriate.
It was noted on the tele today that 64% of NYSE stocks and 52% of NAZ stocks (with a price of over $5) are negative for the year. A lot of companies have not participated in the event.
Make no mistake about it, I consider the "market" to be about 25% over-valued. However, views of valuation matter little when folks are buying stock solely because it is going up.
That said, I follow these 63 Big Boyz that represent about 40% of US equity. At the end of Sept, the earnings estimates for 9909 were for a median of .61, and they came in at .57. That represented a 24% increase over the prior year (in part due to the horrible quarter in the prior year). They are currently projected to be up 24% for this quarter. For the Big Boyz, this year is projected at a 14% increase over last year, and next year a 22% gain over this year.
I will readily agree that the median PE for this group of 31.6 does not compare favorably to next year's growth rate, the median prior 6-year PE of 22.9, or the 5-year annual projected growth rate of 13.4. However, I would speculate that until some event occurs to cause folks to reduce next year's earnings estimates, the ride is on.
The key, as always, seems to be: Follow the Money!
Sorry to all for the lengthy post and introducing this FA stuff.
Berney |
