Semi-Equips - Buy when BLOOD is running in the streets! Message Board

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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!

LRCX 161.43

+1.4%

Nov 12 3:59 PM EST

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To: Terry D who wrote (10429)	7/15/2002 3:58:42 PM
From: Robert Douglas	Read Replies (1) of 10921

No - not that unimportant stuff. THE STOCK MARKET! The stock market is the least important. It is just a mirror reflecting the economic reality. Focusing on near term earnings is the same mistake that investors (I use the term loosely) made at the top. Earnings power and valuation is what is important. As I see it, earnings power of the S & P 500 is somewhere around $55 a share. Given these earnings, a 900 level on the index means stocks are being valued just over 16 times earnings. Bruce Steinberg ran an interesting piece this week on the "Fed model" and showed its excellent correlation over 40 years. This model would provide for a 23 P/E at the present. Myself, I say a 20 multiple is about right. Given the excellent growth prospects in the U.S. and the world, I find myself concluding that stocks are now firmly in undervalued territory, despite the panic among market commentators and letter writers seen at present.

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