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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Adam Smith who wrote (292)	7/15/2000 11:01:49 PM
From: Hank Stamper	Respond to of 10065

Adam Smith: From the article you posted: "But the price/earnings multiples of the S&P are still above the norm at 35, compared with the historical average of 15.... If the P/E ever came back down to the area where it used to be, then it would represent a drop of about 50 percent in the S&P index.'' It is typical of a bear market that Mr. Market over-reacts and drives the P/E below the average (that's how an average is made!). If we have an historically typical bear market, the P/E of the S&P500 could get to 9 or 8. Where does that take the S&P500? Well, how about a 60 or 75% (or more) hair cut? An argument can be made, I think, that with the recent productivity gains the P/E of the S&P can support a couple of extra points. Still, a bear market low of 10 or 12 on the S&P would be butt-ugly. Unless you were in cash. Ciao, David Todtman