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Strategies & Market Trends : Waiting for the big Kahuna
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To: William H Huebl who wrote (51545)5/7/2001 8:55:01 PM
From: Skeet Shipman  Read Replies (2) of 94695
 
Fairly Valued March 30 !!!!!

The First Call valuation model (comparing the forward four quarter P/E ratio to the inverse of the interest rate on the 10-year Treasury) indicates the
market was about fairly valued on 30 March. However, the April surge in stock prices, particularly in the technology sector, along with the continued
slippage in earnings forecasts, again particularly in the tech sector, had pushed the P/E ratio to 22.9, compared to the implied fair market P/E of 19.0.
That means the market is 21% overvalued. And that is based on an earnings recovery beginning in 4Q01 for which there is yet no reasonable
confirmation.

Given the risk that the E in the P/E might continue to be significantly reduced, a 21% premium does not make the market seem enticing at current levels.

www1.firstcall.com
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