It's interesting to read about the "norm" for housing stocks and TSC's analogy with the NASDQ in 1996 versus 2000. The word CONSISTENCY cropped up.
I recall how consistently brokerage stocks traded in the early-mid 90s. Buy at under one times book; sell when over 1.75 times book. And yet, p/e s were always well below the S&P in spite of their making good money in MOST years.
Why so cheap? Inconsistency of earnings was often cited, even though, cumulatively, they were excellent.
Solution? Make them consistent. Bulk up asset mgmt, do credit cards and other steady fee based activities, and VOILA, you have (more)consistent earnings.
Book multiples doubled. The stock's p/e doubled. The stocks, themselves, doubled, and more.
The old "norm" still hasn't returned after 5 years.
The norm? What is that, anyway?
Something that IS, until it ISN'T! |
