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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: jjs_ynot who wrote (21625)	7/31/1999 12:23:00 AM
From: bobby beara	Respond to of 99985

dave that's based on the stock options scam and the leveraged share buy backs to keep the street happy with p/e's reality is that balance sheets are not all that great. bb

To: jjs_ynot who wrote (21625)	7/31/1999 12:44:00 AM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Dave, let me add to Bobby's comment: the problem with "estimated forward earnings" is that the estimates are often overly optimistic, especially when the last two quarters have been good. analysts tend to simply extrapolate the most recent economic scenario to arrive at their estimates. this is one of the reasons why a bear market in equities will start to feed on itself, as a sinking market would slow the economy, which in turn would lead to downward revisions in earnings estimates, which in turn would sink the market more, and so on. a big bull market always sows the seeds for it's own demise. indexation for instance has driven SPX p/e's to the insane levels they're at, as the index funds are mindlessly buying as long as they get inflows. imagine what happens when outflows should start...they will be equally mindlessly selling, which will lead to more outflows, which will lead to more selling, and so on. until one day the SPX p/e is back at 6 and Business Week bemoans the 'death of equities' in a cover story...<g> regards, hb

To: jjs_ynot who wrote (21625)	7/31/1999 6:57:00 AM
From: donald sew	Read Replies (1) \| Respond to of 99985

Dave, >>>> Based on projected forward operating earnings; the S&P is trading at about P/E of 28. <<<< What is the P/E of the current quarter. I think it is fair to say that in an uptrend, movements are exaggerated to the UPSIDE and in a BEAR MARKET the movements most likely will be exaggerated to the downside. With the mentalitality change of a bear market, some or even many will be looking at worse case senerios not best case senerios, so Im more inclined to use current P/E's not forward looking P/E's. seeya