MDA - Market Direction Analysis Message Board

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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 660.19

-0.8%

4:00 PM EST

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To: 16yearcycle who wrote (48870)	5/2/2000 8:35:00 AM
From: Benkea	Read Replies (3) of 99985

"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." 15% of their "earnings" last year came from one-time pension overfunding gains owing to the rising GE stock in those plans. However, people are very happy to pay 50X those earnings as if they will recur for several decades. If GE's stock goes down, not only will earnings go down by that amount, but there will also be a deficiency in the pension which will work in the opposite direction. We won't even start on the quality of CSCO's numbers. "Very few are much above 2.0." So only very few are 100% overpriced which is what your PEG of 2 represents if the rosy growth projections pan out?

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