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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Richard Nehrboss who wrote (67019)	8/31/1999 8:37:00 AM
From: Tommaso	Respond to of 132070

>>if this market were to return to the average dividend yield of the last 70 years the market would decline 70%<< (quoted by you from Magner) This is a simple, factual statement. It does not assert that the market WILL return to that level, but it says that if it did, that's what you would get. Furthermore, the assumption behind this is that companies that retain dividends to finance future growth are already included here. In the end, the only way that a genuine investor (as opposed to a "greater fool" speculator) gets a return on the investment is through dividends or through a buyout. There were many buyouts in the decades when replacement value of the company was much higher than the cost of starting a new company. That is no longer true, with book values averaging under 20% of capitalized value. One can either learn these things from studying economics and financial history, or learn them from living through it. The first way is cheaper.

To: Richard Nehrboss who wrote (67019)	8/31/1999 8:43:00 AM
From: Mike M2	Read Replies (1) \| Respond to of 132070

Richard, you would be surprised how many companies with large share repurchase programs do not reduce the number of shares outstanding due to generous executive option grants. Nonetheless, your point is valid. Lets look at earnings I don't have the precise numbers handy but the market would have to decline 50-70% to return to 1929 levels. This does not even address the widespread use of aggressive accounting especially stock options giving companies the poorest quality of earnings in history IMO. Andrew Smithers did a study showing than if esops were expensed on the income statements the PE on the S&P would be 50% higher in 1998 so we are in the PE of 60 territory. The bulls have an answer for everything and many of their arguments are quite valid but the end result is the bulls tell us it's different this time. Mike