What trouble Asia , Japan, South America , Canada are in ? Asia is still Asia, Japan
is still Japan, Russia is little different than it was 10 years ago, South America is still
South America, and Canada is still Canada as they were five years ago, the only thing which is different is the confidence level, but it can be changed overnight as the economic environment being changed. Just look at the Brazil stock index, it can go down 10% in one day, and the next day it can shoot up 30%, what is changed ? the economic environment , as a result the confidence level of investors and general consumers. The more confidence the consumers have, the more they will consume, and the more the economy will grow. In Oct of 1998, the US consumers almost lost their confidence completely as the stock market crashed, and we were on the edge of serious recession. Thanks to the series rate cuts, the consumers recovered their confidence level, and the stock market rebound quickly , and as a result the consumers consume more , which maintain the continuous growth of the US economical expansion.
As to the value of stock, just like I have said the value of the stock is decided by the last price the stock was traded, that is the price buyers will like to pay and that is the value of the stock, and it is changed on a daily base. The PE did not tell a dam thing about the value of the stock. Atock's PE can be 10 , that is because people do not like to pay a high premium for that stock, so, the low PE only tell me there is no potential value in that stock. You have to change your method of judging the value of stocks.
If you are in your 50s or over, you are in another generation , and High Tech stocks
are not for you, because you may not under stand the high tech industry, and the importance of High Tech industry to the US future. You may well make big mistake in judging the values of high tech stocks, and you may get heart attacks when you own the high tech stocks which had high PE , which you think so .
As to the PE, who said PE 70 is high ? There is no definition about what is high or low PE. Again, the value of the stock is built into the last trading price of the stock, that is what people will like to pay to own the stock. For a stock with low PE, say 10,
it only means noone like to own the stock with high premiums, so the stock price depressed, as a result low PE. Do you understand ????????????????? |
