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Strategies & Market Trends : Waiting for the big Kahuna
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To: James F. Hopkins who wrote (26222)9/2/1998 1:46:00 PM
From: Terry Whitman  Read Replies (4) of 94695
 
With all the media talk about "bargain hunting" and "bottom fishing",
I thought I'd do a little study. I didn't believe it for even a
minute, but thought- hey, I'll try and verify my suspicions. Started
with the glamour stocks (your magic 10). Tabulated and averaged the
P/E's to find out if they were really bargains or not. Now I don't
really believe in the fallacy of fundamental analysis, but a lot of
folks do (or so I thought).

STOCK P/E
MSFT 57
INTC 22
CSCO 65
DELL 59
WCOM 205
GE 30
KO 42
PFE 49
MRK 29
NB 14

AVERAGE P/E: 57

Wow! I thought, that's unbelievably high for a bottom. So, I reasoned
maybe people weren't actually buying THOSE stocks yesterday- so I
tabulated the 10 most actives on the NYSE and NASDAQ:

NYSE P/E NAZ P/E
STCK STCK
CPQ - DELL 59
AOL 386 CSCO 65
LU 112 MSFT 57
TRV 14 WCOM 205
BA 172 INTC 22
DIS 29 PSFT 51
T 23 CMCSA -
HD 41 ORCL 24
GE 30 PMTC 20
PFE 49 YHOO -

avg. 95 63

I threw out the negative ones for the average.
As you can see, there aren't many bargains in there either.
Same old story from this point if view. I'm not sure what the average
P/E of the SP500 is now, but I recall it reaching around 30 at the
peak. If we're off 15% since then, that would put us at 25 or so now-
still a huge stretch above the long term average of 14.

Having said that- throw out those fundamentals, and ride this puppy
back up to the right shoulder, if you dare.

TW
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