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Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (3800)	7/29/2000 11:08:10 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 30051

Nothing wrong with value stocks myself, but people have to be aware that these should be bought near their book value (or long term historical multiple to book). PG is a good defensive stock for a recession, yet it is still selling at a PEG in excess to 5 relative to its industry median of 2.2. A PE of 25 and PB of 7, rich for a company that is showing a knack for "screwing up" recently. Unlike TYCO which is a growth engine, PG is just a security blanket and if it breaks $50, it may very well go to $25 (particularly if we get a bear market with the Dow reaching 6000 or so). I believe that CAT might even be worse, since their earnings, unlike those of PG are not that secure and depend very strongly on the economic environment. I think that CAT still has a $2 B of unfunded retirement liabilities from the real "bad days". If we get another "Asian Malaise" (and Indonesia is starting to show new cracks in its armor, something that exposes Japan Ltd to major write offs when their banking system is still precarious), I think that CAT will be toast. Stock gets into major downtrend because the market anticipate future problems, may be the market knows something we don't. Zeev