Graham and Doddsville -- Value Investing In The New Era Message Board

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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era

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To: porcupine --''''> who wrote (44)	3/7/1998 4:42:00 PM
From: porcupine --''''>	Read Replies (3) of 1722

Wayne Compares Interest on Bonds With Earnings Yields Stocks: [An editted excerpt from a work in progress] ....[E]arnings, whether 'fully reported' or 'cash' are mostly not received by investors. They are reinvested. That is where the growth comes from. In order to compare them to bonds you must reinvest most of the bond interest and compare earnings/cash earnings to the new bond income stream. ....[I]t takes almost a lifetime to catch up to the highest quality corporates. That has never been even remotely the case in financial history. That this is lunacy is even more obvious when you consider the fact that the corporate earnings streams are essentially full of it when stock options etc..are considered. As a private owner those options expenses would be very real. If markets truly are efficient over the long haul ("a weighing machine" Graham) they will someday be important in investors calculations. (reality that is) If you were a private owner you would have to be a maniac to accept the additional risks and active management responsibilities while never seeing the same income that bonds could get you in your lifetime. Maybe your grandchildren's! Wayne

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