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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA
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To: Steve Lee who wrote (12739)6/12/2002 3:26:10 PM
From: David Howe  Read Replies (2) of 19219
 
Off the top of my head

1) Do you know what the average P/S ratio of SP500 stocks is? 21?

2) Do you know what the historical average of that metric is? 17?

Not that out of balance considering that the economy looks to be recovering, we are at recession lows in terms of EPS and we are in a stimulative low inflation, low rate environment.

You could buy MSFT the company for $257 billion (taking out the $38 billion cash in the bank) and they generate $12 billion in free cashflow. As a business owner that's a 4.5% return on investment with significant room for improvement if business spending ever comes back. 4.5% return on equity is better than bonds and has greater upside.

IMO,
Dave
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