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Pastimes : Ask Mohan about the Market

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To: tekgk who wrote (7156)	11/6/1997 4:12:00 PM
From: Joseph G.	Read Replies (1) of 18056

<<Senior economist Haubrich noted that a price-to-earnings (P/ E) ratio at 19 may seem high at the moment. ''But this ignores the important distinction between the level and the growth rate of earnings. It's not the height but the speed of a rocket that keeps it moving forward,'' added Haubrich who stressed that, even if stock prices do not rise as fast as they did since 1995, this does not necessarily mean they must retreat from current levels. ''If growth remains strong, the P/E ratio may likely stay at a consistently high level since investors expect earnings to continue rising,'' Haubrich said, adding that ''asset pricing is not an exact science'' and has a lot to do with investors' moods.>> Or, to quote even more famous economist Irving Fisher, "Stocks have reached a permanently high plateau." (1929) Joe

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