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To: Glenn D. Rudolph who wrote (101278)	4/16/2000 11:28:00 PM
From: Bearded One	Read Replies (5) \| Respond to of 164685

The point is, Glenn, there was a reason that PE/G of 1 is a good rule-of-thumb. Take the earnings, compound it by the earnings growth over a few years, and you get a guess as to the total earnings over that time period assuming constant growth, ignoring inflation. That was a rough estimate of how much the company could pay back its investors for owning the stock. A PE/G of greater than 1 means that the companies growth in earnings has to accellerate to generate earnings that justify its stock price. People don't realize that even for a company that is growing at 50% or 100% a year, it will never justify its stock price at that rate if the P/E is 200 or 300. Now you can make arguments about re-investing earnings, and 'earnings are for losers' and all that, but people should at least start from the point of knowing the math before they throw it away. And they don't start from that position.

To: Glenn D. Rudolph who wrote (101278)	4/16/2000 11:33:00 PM
From: Skeeter Bug	Respond to of 164685

gdr and beard, investments, in a rational world, are compared to alternatives. a growth to pe ration makes sense in only certain environments. too many factors to make a fast and easy rule. what are t-bills going for? what is real estate looking like? is the growth rate going to accelerate? decelerate? what is the risk of new technology obsoleting the company? etc. btw, uncertainty about growth, in normal times, is a negative that is discounted rather harshly rather than rewarded w/ billion dollar market caps.