Hey Rob-
In one of my economics classes I'm not so far removed from, our prof. calculated the average p/e throughout the course of the stock market. Factoring in productivity growth, economic output, inflation levels, weighed against the alternative risk of bonds, average p/e came to 21.
Accounting for increased worker productivity and economic growth of 4.5%, nearly double the old number, the "new economy" should stand at a p/e of 28. No More, that's even considering a 4.5% growth in GDP, which we all know those days are long gone.
My prof, a repsected economist at Michigan (GO BLUE!!!) scoffs at the notion of a new economy, as if the fundamentals of economics no longer applied. Truth is, the internet does give greater access, yet it builds on itself. If e-commerce continues to be sluggish, sales of internet routers, serves, hardward or software will begin to plummet. Just think of companies promising 40% growth over 3-5 year periods! I'll believe it when I see it-
Over.
by the way, what the hell were you doing at 2:30 in the morning? |
