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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 685.66+0.2%Dec 5 4:00 PM EST

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To: jmootx who wrote (71380)3/6/2001 12:52:52 PM
From: Bruce Brown  Read Replies (2) of 99985
 
jmootx wrote:

Also on the 70's, why different today.

Remember besides inflation at 6-10%, interest rates at 10%, etc. etc. stocks were more components of dividends...yields needed to be 3-5%. The 1990's saw the demise of dividends, so the old PE standard is gone for good.


Bingo! Yields have dropped as the dividends 'contracted' and this has been reflected in the average PE advancement. In addition, accounting changes have also been a part of the PE advance. So when we compare historical PE's, all of this needs to be factored in so we know when and what we are comparing.

The sad thing is that I have a link to the historical PE and dividend yield information on my Netscape Browser, but each time I try to launch it the thing crashes. So I'm using IE at the moment and don't have the link available. As soon as I get Communicator up and running, I will submit the link.

BB
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