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To: RocketMan who wrote (28208)10/13/2000 6:31:33 PM
From: UnBelievable  Read Replies (2) of 436258
 
My comment was not intended to represent an opinion about any particular stock.

My point is simple. If our economy is growing at 5% per year it is not possible to provide real returns on capital of 50 to 100% a year.

I don't think that people are holding stocks based upon the price they are now, but rather the rate they can be expected to grow into the future. As long as stock are held with an expectation that their value will increase based on expectations of the growth in real goods and services that the company can provide. A stock selling at a p/e of 27 will only increase at the rate it increases real earnings. Since an T Bill has a P/E of about 8 a person should only be willing to buy a stock with a higher p/e is their is an expectation that the earning per share will be growing much faster than eight percent per share. Unfortunately in almost all cases where there is substantial growth their is also a substantial increase in shares.

People have experience investment returns that have approached 50 to 100% per year. Expecting 25% a year is not considered at all unreasonable. Baby Boomers or not, that just isn't going to happen in an economy that may be growing as fast as 5% per year, and more likely 3 or $%.
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