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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: tonyt who wrote (90568)	4/3/2001 4:48:44 PM
From: Captain Jack	Read Replies (1) \| Respond to of 97611

tonyt-- the only thing we need is buyers. Sadly they will not come until there is a strong belief the earnings will return in a qtr or 2. The FED needs to move rates down faster and farther,, add a tax cut,, no BS $300 either and the trail up will be seen. With those two things in place we start to see light at the end of the tunnel. Now the only light down there is a train coming at you!

To: tonyt who wrote (90568)	4/5/2001 5:23:49 AM
From: MeDroogies	Respond to of 97611

Actually, The Economist made an excellent point about the 1929 crash. Since 1929, the average PE ratio is about 18, historically. However, BEFORE the crash, it was much lower. The concept of "historical" valuation depends on the history you choose to define it with. Prior to 1929, the pool of investors was smaller and with severe limitations on the ability to move capital around. This kept PEs low. This changed (over time) after 1929, which is why historical PEs rose. The last 10 years have seen the pool of investors grow dramatically, and the cost of moving capital has fallen dramatically. This has caused the PE ratio to climb. The question becomes - what is the new "historical" valuation that we will base our judgements on? Clearly the basis of the last 25/50 years is wrong because investors are more mobile with their cash, and there are fewer barriers to doing investing from a cost basis.