To: Rarebird who wrote (50486 ) 3/22/2001 11:33:50 PM From: Oeconomicus Read Replies (2) | Respond to 1) There is absolutely no basis for arguing that a 15 PE is justified based on a 15% growth rate. Justifiable PEs depend on things other than growth of earnings - specifically interest rates. A 15 PE would be difficult to justify if growth was low and the PE's inverse, the earnings yield, was low relative to short-term interest rates. The early '80s was a good example of this (though grow wasn't really low). I recall, in fact, a heated debate about justifiable PEs among the market strategists at Smith Barney in the Spring of '83 when several computer stocks were pushing multiples higher. OTOH, with interest rates low, a higher PE is justified, all else equal. Also, it would be more "reasonable" to consider historical ranges of PEs rather than just arbitrarily assume a PEG ratio of one-to-one is some kind of magic number, don't you think?microeconomic conditions being bullish if there are supply/demand imbalances for the metal (other than the temporary imbalances resulting from investor fear), but you'll have to explain the bullish macro conditions.
