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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: High-Tech East who wrote (65516)	12/30/2000 12:37:14 PM
From: KymarFye	Respond to of 99985

We'd all rest a lot easier if you took profits on at least one of your March puts.

To: High-Tech East who wrote (65516)	12/30/2000 2:24:16 PM
From: jmootx	Respond to of 99985

A quick note about PE ratios Remember that the old standards for PE ratios, somewhere in the 8 to 12 range for S&P stocks during the initial phases of economic recovery were based on companies paying dividends. Even as recently as 1988, I can recall IBM paying me a 4% dividend, now that yield is down to 0.6%. As long as companies believe in stock price first, dividends last, then the bottom for these PE ratio's will remain above those old metrics. Also, those old PE's discounted the previous single job for life culture: just like IBM use to have the pride and standard that they would never allow a worker to be laid off. Only in hindsight when we see the bottom to this bear and profits during both recession and the recovery will people be clear on the new standard for PE ratios. The top was I believe 34x trailing earnings last March, my guess is the bottom will be about 18x, which is still a ways down from 26x today. But nobody really knows. GE was at a PE of 12 at the bottom of the last recession, before initiating a series of stock buybacks in 1994. So the new metric has expectations for layoffs and buybacks.