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Pastimes : How to best deal with KOOKS at this web site
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To: Gottfried who wrote (696)7/6/1997 11:26:00 AM
From: Iceberg   of 1894
 
MrB and Gottfried, re: PE ratios and today's market value...

I get Value Line's Expanded Edition, which contains about 3,500
stocks. Each week the report lists the median trailing P/E ratio,
median and average yields for the composite (aggregate?) group of 3,500.

I pulled out a few of my recent back issues to see what the trend is
with the P/E ratios in view of MrB's question about money being thrown
at the market. Here are some of the median trailing P/E ratios for
the corresponding weeks (the one's I could still locate)...

Date P/E
-------------
Feb 28 - 17.4
Mar 14 - 17.4
Mar 21 - 17.5
Mar 28 - 17.0
Apr 18 - 16.8
May 09 - 16.4
May 16 - 17.0
May 23 - 17.3
May 30 - 17.3
Jun 06 - 17.7
Jun 20 - 18.1
Jun 27 - 18.3

Remember, these are median ratios, for small to mid cap stocks. Also
they are from 3,500 stocks picked by Value Line. So they don't
necessarily represent the market in general.

If we can assume that P/E ratios reflect money being "thrown at the
market" (to use MrB's terminology), then judging from the trend of the
above ratios, one could resonably conclude that a certain amout of
money has been thrown at the market since approximately the first of May
- as indicated by increasing median P/E's. However, it isn't clear to
me whether or not this increase is anything to get alarmed about.

Any ideas?

Ice
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