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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Uncle Frank who wrote (43691)	6/20/2001 4:26:32 PM
From: Seeker of Truth	Read Replies (1) \| Respond to of 54805

I'd like to embellish your good point that the P/E's and surely the P/DCFs have become much lower or else are meaningless. I remember in the days when there were few growth stocks, it was fashionable to buy cyclical stocks when they were losing money. Now according to any ratio, at that moment they were very to the tenth power overvalued. But in fact they swung around. Lately Bruce Brown has been making the point that tech stocks are also cyclical, as this minidepression has illustrated. So their valuation is terrible when measured by various ratios just now. Of course when a company's earnings have not yet revived, to pay something like a long term average value will be mistaken as the price must include the fact of bad current earnings.

To: Uncle Frank who wrote (43691)	6/20/2001 4:28:36 PM
From: Stock Farmer	Read Replies (2) \| Respond to of 54805

>>since the nasd includes a number of companies that have negative earnings, the p/e derived from the exercise is meaningless<< UF, no no no... The TOTAL price the market is paying for ALL earnings is the sum of market caps. The total earnings is the sum of profits minus losses. Period. That is the only definition of aggregate PE that stands an unbiased test of logic. ... insofar as PE and Logic should find themselves together in the same sentence... >>I don't invest in companies that aren't profitable, and the p/e for the companies that I follow has been dramatically reduced over the last 15 months.<<< You are talking subset, I am talking aggregate. Both can be correct and apparently contradictory. PE going down? Maybe. Again, depends sometimes on how you look at it. For example, price of Cisco has dropped by factor 4'ish. But most recent quarter has their earnings down by even more. So spot PE has gone up. If "V" recovery, no big deal. But if U or L... well I'm afraid you may regret having come to your conclusion about PE going down. "Objects viewed in mirror may be closer than they look". >>There's nothing against writing [covered calls] in a bearish environment either, John, provided they are long term holdings. If one's holding period for a stock is 10 years, one will surely encounter a variety of market conditions, but they will be of relatively short duration. << Er... Yes, insofar as a strategy which involves a plunging net worth is acceptable, writing calls on a declining asset base is one way to reduce the impact of a plunge. Another way is to dispose of the asset, allow the price to plunge and then re-establish the same position post-plunge. That's "LTBH (interrupted)". I used to be a purist "LTBH"... now I keep my 350 shares of Laidlaw for the same reason other folks post their diplomas. Imagine how many shares I could have today if I'd sold at the first hint of danger? Or the second? Or the third? Oooh... I had so many hints. Weeks apart. And well meaning advice. But I was a die-hard LTBH guy. >>As I see it, there are 2 problems with shorting puts:<< I think I need my prescription filled, because I see three reasons in your post... lol... Indeed thank you for increasing my perspective, because one of them is indeed valid when you strip away the emotion and look at the economics ruthlessly. Namely, that tax sheltered accounts prohibit the writing of puts. But only one. I hope it was amongst the two you were thinking about <vbg>. On increased productivity you wrote: >>Imagine the competitive disadvantage you would be at if you tried running any business today without utilizing computers.<< Imagine the competitive disadvantage you would be at if you [were six inches shorter than the shortest midget]. Identical logic. But doesn't make the other midgets any taller. Furthermore, pervasive importance and profitability are separate things. Imagine how effective you would be computing without electricity? Yet I note with interest a rather striking lack of obscene profitability in the Electric Utilities serving most of the folks who post to this thread :) Why should I extrapolate any differently twenty five years from now than I should have done twenty five years from then? And finally, yes a salute to you. We may disagree... cordially of course... because yes, our respective micro productivity continues to be greatly enhanced by discourse that ordinarily would not have occurred if it weren't for the Gorillas and their retinue. Thank you. John.