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Technology Stocks : Brightpoint - CELL
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To: mauser96 who wrote (705)8/5/1998 10:43:00 AM
From: Paul Shread  Read Replies (1) of 1999
 
Interesting post. I might offer two clarifications: I can't speak for the other high PE bear markets, but inflation in 1987 was at 8% and the Fed was actively raising rates at the time; it was shortly after Greenspan took over. And the market that year was driven almost entirely by merger speculation. The fundamentals to this market are much better.

I would also add that (similar to what you pointed out) we have probably already had a stealth bear market similar to '94. The average Big Board stock is now more than 25% below its highs. I wonder what the S&P's PE would be if you threw out KO, MSFT and a very few select others; what it would take to bring those companies down, I just don't know. The Dow is trading at a PE of less than 22; in a zero-inflation environment, we are at most 5% above fair value there.

Just my opinion, but with earnings and GDP still positive, and no sign of rising inflation or interest rates, Ralph is going to look as dumb to the downside as he did to the upside.
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