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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 665.67

-0.9%

4:00 PM EST

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To: jmootx who wrote (48740)	5/1/2000 11:53:00 PM
From: 16yearcycle	Read Replies (2) of 99985

Gosh, you have a problem with number one and so I stopped right there: "1. PE ratios for blue chip stocks, like GE and Cisco are now reaching FOUR times the company growth rate. (bubble)" Let's try some facts. GE is expected to earn about 3.75 this year and has been growing e at right around 20%. So the peg ratio is actually right at 2.1. Oh, if you don't like me projecting forward, we still get under 2.3. 2.3 is different than 4. CSCO is expected to earn over .65 in the next fiscal year. It has been growing in excess of 50% per year. So we get a peg of about 2.3. OK, the fiscal year doesn't start for another q so if we go by the current .52 pace, we get 2.73, not 4.0. is 2.73 too high? Yes, I think so, but it isn't 4. Currently we have a lot of growth stocks with peg's between 1 and 2. Very few are much above 2.0. On March 10, we had a tremendous number over 2.0 and it should have been a warning, so I agree with your concept, but I think it is important to get the numbers right.

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