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Strategies & Market Trends : Buffettology
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To: Richard Nehrboss who wrote (554)11/9/1998 9:18:00 AM
From: kahunabear  Read Replies (1) of 4690
 
This is one of my big gripes. Forward PEs are constantly quoted as if they actually exist and should justify today's prices. This has become more and more accepted over the last few years and IMO is just one of many examples of a frothy market. Don't get me wrong, I think earnings estimates can be valuable tool, but talking about them like they were already in the bag is a joke. All one has to do is look back a couple of quarters ago at the 3Q numbers to see they are often way off.

IMO, it is even worse to compare a forward PE to historic current PEs, which is what seems to be happenings here. It is not the same data. Any valuation can be justified using this type of approach.

It is obvious to me that investors (gamblers ?) these days do not want to see the truth. It can go on as long as there is another marginal buyer who believes this stuff. I am constantly amazed at how many of those there are. With 24 stock infomercials like CNBS it is easy to find new recruits. But like any such scheme it will eventually play out.

I just love it when they come on and say something like "Find out if this rally is for real and stocks will go higher from here. We will will ask John Q. Fundmanger from BlahBlah Growth Fund what he thinks."

Give me a break. Like there is any growth stock fund manager out there that doesn't want to see stocks go higher. This is usually followed by a few brokerage analysts to close the deal. Last time I checked brokers are successful when stocks go up. It is a constant stock advertising blitz and I think this has as much to do with the overextended bull as anything.

WS
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