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To: Vitas who wrote (34297)	11/27/1999 10:58:00 AM
From: JDinBaltimore	Read Replies (1) \| Respond to of 99985

Vitas, If these companies are having a tough time getting to "0" growth, and the historical average for say DOW is 5%, how could one even justify 10%, let alone 20%+ and a historical P/E range of 15-19. I have a hardtime believing this "New Era" BS, possibly "New Error" is more appropriate. Ther is only so much disposible income to buy these products; what about the other staple item in the GDP that are required food, clothing, shelter. With a negative personal savings rate how will thest companies be spported once the credit cards are maxed out? JD

To: Vitas who wrote (34297)	11/27/1999 9:02:00 PM
From: Jurgen	Read Replies (1) \| Respond to of 99985

Vitas, thanks for the interesting post on valuations. I've been looking for something like that. i don't really understand this part: "..The discount formula then gives the present value of the income expected as [(1-20%)^10 -1] / [(-20%) X (1-20%)^10] = 42. This would be the P/E expected..." The discount factor of -20% makes sense, but i can't see how he derives the PE from that. The present value of the earnings expected in year n should be (1+20%)^n. I'm probably missing something. Any ideas ? Jurgen