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Technology Stocks : Semi Equipment Analysis

SOXX 316.33

+1.3%

Dec 10 4:00 PM EST

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To: Return to Sender who wrote (4795)	8/9/2002 12:18:39 AM
From: Cary Salsberg	Read Replies (1) of 95546

RE: "The total stock market valuation as a percentage of GDP still hovers around 100%..." A given GDP yields a given level of current corporate profits and a given level of future income streams. These are discounted to produce PEs and price levels. The discount is a function of current interest rates. It doesn't seem to make sense to compare stock market valuation to GDP without including the real interest rate. Also, the % of business (and GDP) represented by publicly traded companies is another important intermediate variable between GDP and stock market valuation. During severe economic contractions such as a "bubble" aftermath, the GDP remains flat or lower for a while. The market always looks beyond the valley, so it may gain on the GDP as a %. In conclusion, I need more data to put real value into a stock market valuation/GDP ratio.

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