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Strategies & Market Trends : Value Investing

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To: James Clarke who wrote (5726)	1/12/1999 10:27:00 AM
From: Freedom Fighter	Read Replies (1) of 78671

PEs and Growth Rates THere is another problem with that whole concept. The market itself has EPS growth of between 5.2%-6.5% on a peak to peak basis depending where your starting point is. Does anyone think the market should sell at 6 times earnings? Would anyone out there not pay 16-17 times earnings for Coca Cola even though it's long term growth rate might be slipping below that? The examples are endless. I think the whole concept is faulty. It comes down to discounting those future earnings in some way. It just so happens that higher growth rates equal higher PEs but there is no real correlation from a value perspective except coincidence. Wayne Crimi

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