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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (5786)	7/12/2001 5:06:09 AM
From: Maurice Winn	Read Replies (2) \| Respond to of 74559

Thanks Jay. P:E above 30 suggests about 3% return on investment [excluding productivity bonus]. That's not bad compared with zero % in the bank. But since Krugman-type managed inflation is likely, which increases the nominal value of shares and other asset prices, a P:E of 30 becomes reasonably attractive. The Dow is at about 25:1. I went right through them and averaged their P:Es [ignoring about 3 companies which were obviously without much profit temporarily so their P:E was silly]. Yes, I know that somebody will have all the guff on P:E for the Dow in cyberspace somewhere. I like to add up some numbers on a calculator [or back of envelope]. The Dow doesn't look expensive to me compared with interest rates; neither does the Nikkei. Not a bargain, but not expensive. Which is really the way it should be. When the Japan government does some money-diluting with a Krugman devaluation, that will push stock prices up. Since Japan's population is aging and reducing, they should be expected to produce less as oldies retire [and die]. Mq