To: Crimson Ghost who wrote (68551 ) 2/4/2001 8:31:49 PM From: Zeev Hed Read Replies (1) | Respond to George, I have had some problems deciphering the NYA cycles this year, it hit its low way before all the other markets and actually made a new high in early September, the most recent move "looked" like it was going to make another new high, but that was aborted. It might very well stay in a plus minus five percent range through most of the coming turbulence (612 to 675 or so). It really depends on whether we are going into a real recession or we are only going to go through an inventory correction. The Naz has a real problem with valuation, but many of the larger NYA companies , particularly all those that buy back their shares in lieu of paying dividends, are not at such "irrational" levels. I calculated once on this or another thread that MRK actually pays out more than 4% dividends if you take their buy backs and calculate back the equivalent pretax dividend rate. For instance, during the quarter ending March 31, 2000, they paid out $677 MM in dividends, but spent $2,142 MM on buying back their shares. In term of pretax payments, if they paid out this $2 B, they would have had to pay out $3 B to have the same after tax effect, thus their dividend payments (pretax) was actually more like $4 Billions just for that quarter. Of course, they did not continue at that pace (the stock became "dear again"), but on the average, they pay out a hefty dividend which with their growth rate of 15% plus, makes them still a good value relative to treasuries. There are many other like that, unfortunately no one is accounting for the yield on the indices in this manner (they do not want congress to notice that companies have found a smart way to pay out tax free dividends, congress may want to close this loophole if it became too known), so it is difficult to come up with a fair valuation on the whole index.
