Roger's 1998 Short Picks Message Board

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Strategies & Market Trends : Roger's 1998 Short Picks

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To: Zeev Hed who wrote (17789)	3/19/1999 3:31:00 PM
From: Oeconomicus	Read Replies (2) of 18691

Zeev, Roger, did either of you hear the guy from American Enterprise Institute on CNBC talking about "Dow 36,000"? Seems he and an economist co-author are about to publish a book arguing that the markets have been mispricing equities for a long time. Well, basically forever. He submits that over the long term, stocks are no more risky than bonds and, therefore, the risk premium on equities should go to zero. On that basis, with earnings growing at the same pace as nominal GDP and with interest rates staying in the neighborhood of 6%, the market PE should be around 100, putting the fair value of the Dow at about 36,000. Now! What do ya' think of that? Bob PS: I guess he doesn't agree that volatility of returns is the proper measure of risk. PPS: He will sell many copies of his book.

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