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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: Zeev Hed who wrote (67271)5/14/2002 8:41:59 PM
From: paul_philp  Read Replies (1) of 99280
 
Zeev,

Thanks for the response. A agree that we will return to more normal ranges for the P/E. If you exclude the bloated goodwill writedowns we are probably at 17 - 18 now. I also this a reasonable path we may take to P/E correction is by having an extended trading range. If price stays flat as earnings rise we will get the multiple compression we need.

The final part of my research will be to look at the P/Free_Cash_Flow ratios and compare them them to bond yields and see if the overvaluation is as apparent. At least for technology big caps, P/FCF is a more predictive indicator than P/E.

Paul

[Edit] Do you eliminate the possibility that September 21 was capitulation? Does the opptimism since then disuade you?
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