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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Uncle Frank who started this subject12/6/2001 3:14:07 AM
From: techreports  Read Replies (2) of 54805
 
We've had many discussions about whether the S&P is overvalued or undervalued.

People have compared the P/e ratio of past recessions to this one. The difference is that interest rates are the lowest they've been in 30 years and could go lower. Second, inflation is low as well. Add these two things together and that means the 20 to 25 P/e ratio on the S&P isn't outrageous as some like to say. This also means there is no room for multiple expansion since inflation can't really get any lower and interest rates are more likely to go up. So for the markets to produce good returns, it would require profits to grow.

Over the past 30 years, consumer debt has grown faster than GDP. There is no way this can continue. While the FED is doing everything it can to help the economy, there is not much being done to help fix the consumer.
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