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To: Lee Lichterman III who wrote (37028)	12/2/2000 9:15:10 AM
From: Square_Dealings	Read Replies (1) \| Respond to of 42787

Lee, So does it mean that a rate cut isn't the answer to everyone's problem because it would accelerate a fall in the dollar? At what point does the fed start easing rates without triggering another manic consumer spending spree? I agree with your comments on the DOW stocks with pe's of 40-50 growing 10-15%. GE comes to mind. I cant figure out how people can believe that it won't be affected in a big way in a slowing economy. They are holding a lot of credit. M.

To: Lee Lichterman III who wrote (37028)	12/2/2000 2:26:10 PM
From: eddieww	Read Replies (1) \| Respond to of 42787

"I don't think you can compare PE ratios of the NASDAQ to the DOW" I wasn't suggesting a comparison of p/e's, what I was suggesting was a Linear Regression analysis of, for instance, the aggregate p/e of the compx since Oct. '91, comparing the result to the current aggregate p/e, and from that calculating a value for the index. For example, we might find that such a regression would indicate a mean p/e for the compx over that time of 40, while doing the same for the spx would yield 23. Then all you have to do, for each index individually, is find the current aggregate p/e and divide by the mean historical p/e to get a ratio and then apply that ratio to the current value of the index: if historical mean p/e = 40 and current mean p/e = 80 then ratio = 40/80 and current index value = 2646 then (40/80)*2646 = 1323 This is a hypothetical example since I have no values for the historical (since Oct. '91) p/e's. Such an analysis takes into account both the rapid p/e growth of the past 5 years, as well as the slower, and some would say more normal, growth of the first 5 years of the current expansion. I was suggesting that it would be interesting to see the results of such analysis for compx, spx, and the Dow, but each is separate and independent.