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Politics : Ask Michael Burke

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To: Knighty Tin who wrote (48066)	2/21/1999 1:32:00 PM
From: Shane M	Read Replies (1) of 132070

MB, Some comments on market breadth hiding in those numbers. >>>>5. John Hussman, of Hussman Econometrics, has the letter of the week. If we drop down to a fairly bloated market pe ratio of 20 times and have eps growth of 5.7% over the next 10 years, the S&P 500 will be priced where it is right now. <g> Too bad we won't get the 5.7% is my main comment to that logic.<<<<<< From the Feb 4th Morgan Stanley/Dean Witter Feb 4th "market watch", in the S&P 500, the top 50 high PE stocks have an average PE 50.9, while the bottom 450 have an average PE of 20.2. "The 50 stocks with the highest multiples account for 25% of the total capitalization of the S &P 500." The numbers are also broken out a second way: "The fifty largest stocks in the S&P 500 by capitalization have an average multiple of 29 and account for 55% of the total capitalization of the index. Ther remaining 450 have an average mulitple of 20...." Not than a market multiple of 20 is a good deal on any of these, but this has to be looked at as a multi-tiered market IMO. As an asset class, small caps in particular still look cheap to me. Shane

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