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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: LLCF who wrote (148069)2/3/2002 1:27:07 PM
From: sun-tzu  Read Replies (2) of 436258
 
Swenlin addendum...apologies to carl for the reprint but this sham needs to be exposed

February 3, 2002
Weekly Commentary Follow Up

In my Weekly Commentary I mentioned the fact that, according to Barron's
Online, the P/E of the S&P 500 this week suddenly dropped to 28.57 from
40.03 the week before. I suspected that it might have been a misprint. As it
turns out, it wasn't a misprint, but a deliberate departure from accounting
standards used for at least the last 100 years. Clyde Kendzierski (The
Seventy Percent Solution), pointed me to an obscure notation in the print
version of Barron's that states that Standard & Poors "has modified
reporting to use Operating Earnings" to calculate S&P 500 P/E.

One of the charts that keeps me anchored in reality is the one displaying
the S&P 500 in relation to its normal P/E range.
(http://www.decisionpoint.com/members2/DailyCharts/SPPE.html) Fortunately,
we track the individual stocks of the S&P 500, and we can calculate the
actual P/E from the earnings numbers dredged from the quote systems, and we
can continue to report on the horrific departure of current earnings from
historical norms . . . until they start using Operating Earnings in the
quote systems.

For the record, we calculate the P/E by dividing the total per share dollar
value of S&P 500 stocks by their total EPS. As of Friday's close The real
P/E was 42.40.

Have a good weekend.

Carl
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