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Strategies & Market Trends : Buffettology

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To: Bob Martin who wrote (574)	11/20/1998 6:09:00 PM
From: Tomato	Read Replies (1) of 4691

My math and accounting skills are suspect, but my instincts tell me that KO's p/e ratio is suspect too. Are you saying that p/e ratios don't matter at all? Or that if KO keeps growing at 15% for the forseeable future that it's ok to ignore its p/e ratio? Seems to me that given markets tend to have a given p/e ratio that provides a ceiling or yardstick for investors. We're at historically high p/e ratios, and I don't see IBM trading at a p/e of 24 (absent revolutionary new products) if the market p/e reverts to the mean, which a lot of people see happening. Do you think there's a margin of safety with IBM at a p/e of 24? If you have a minute, I'm curious to see what your spreadsheet would give as a fair market price for KO. TIA.

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