Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: Alan Bell who wrote (5953)	7/14/1998 10:18:00 PM
From: MrGreenJeans	Read Replies (1) of 42834

Risk vs Reward <<When we think about the huge gains we have had because of PE ratio expansion over the past few years, we recognize that they aren't likely to continue. So the obvious answer is that there must be a bear market.>> Not necessarily, maybe the obvious conclusion is that at these levels the risk is greater than any potential reward and better risk / reward ratios may present themselves in the future for greater profit growth. << But there is another alternative - a rise (though volatile) of high single digit gains which follow earnings growth. >> If the market gains in the high single digits, I assume this is what you are referring to, I would conclude that profit growth is assumed to be slowing. Slowing profit growth would be a decided negative for pe multiples, in my view, in this market and the market would settle at lower levels.

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