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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Bill Ounce who wrote (53258)	8/1/2001 11:06:37 AM
From: Bill Ounce	Read Replies (1) \| Respond to of 94695

thestreet.com: Big Tech Stocks Still Teetering on the P/E Precipice thestreet.com According to this guy, we aren't even close to the bottom yet. [...] This column calculates that the Nasdaq 100 index currently trades at 95 times weighted forecast earnings for 2001. For 2002, supposedly a recovery year in many people's eyes, this price-to-earnings ratio is 74. [...] But it implies that tech companies, in aggregate, will post annual earnings growth of more than 50% in coming years -- a preposterous notion, considering that they weren't doing that even when the boom was in full swing. [...] So what do these P/Es tell us? The Nasdaq will, over time, fall a lot further. If the Nasdaq 100 were to trade at 30 times 2002 adjusted earnings, it would have to decline 60% from July 24 levels, or Remember that 30 times is a high P/E for a bear market. And 30 is still arguably too much for a market that's going to struggle to show sustainable earnings growth of more than 20% for the next few years. [...] Reality is creeping over this market subtly as a summer mist, but as inexorably as a glacier. Don't get crushed.