Dear Mr. 321,
Does anyone here subscribe or read Bob Brinker? I was sent some figures today claiming they are from his latest newsletter. I can't verify, but this is the gist of it. Based on his 2002 operating earnings estimate, he comes up with a PE ratio for the S&P of about 21-22, and on his forecast of 12% earnings growth for 2003, he gets a 2003 PE of 19-20. My questions: How does he figure this PE? The S&P guy just the other day gave a PE of like 50 based on GAAP and still like 36 based on "the liberal accounting allowed by companies today."
Also, Brinker apparently believes that all cyclical bears and cyclical bulls that occur within the framework of the secular bear he believes we are in will each last from 1-3 years at the most. Since the first downtrend (cyclical bear) in this secular bear market is now about 32 months in duration (if it is not already over), he seems to believe that a cyclical bull of 1-3 years must emerge shortly (if it has not already begun). Who says each downtrend and uptrend within a secular bear (or bull) must last 1-3 years? Brinker (from what I can gather) only seems to look at certain indicators like sentiment, fed policy, etc. He does not seem to deal with debt issues, corruption, trade imbalances, etc. I have a real problem seeing this market rally for the next 1-3 years based on the figures I'm looking at. Is this enough information to respond and blow holes in Brinker's thinking and forecasts? Again, I am assuming I have been given accurate information.
I remain,
SOROS
P.S. All the above is the fictional ramblings of a senile old fool. SOROS' standard disclaimer because I have heard some people have reputations for not liking when others use their name and figures, etc. |
