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Pastimes : Ask Mohan about the Market

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To: Bonnie Bear who wrote (10646)12/9/1997 9:39:00 PM
From: Joan Osland Graffius  Read Replies (2) of 18056
 
Hi Bonnie, Re: books value of an index.

How are you? I am not disagreeing with your thoughts..but one point. Back in the old days 1982 we did not have very many software companies or was software considered to have value, i.e. computer companies were giving away their software. Now that Mr. Gates has been successful teaching the world that software has value but his company does not have book value relative to Intel for example, and IMO this does distort index evaluations when it comes to book value average comparisons between 1982 and 1997. I think you point is well taken as far as evaluation, but one thing to consider is interest rates in 1982 and 1997. The market can carry a higher evaluation with lower interest rates. Each investor must decide how much is he/she willing to pay for an asset based on evaluation.

Have a good evening, Joan
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