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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: jeffsthoughts who wrote (14709)	8/12/2001 10:03:09 AM
From: Trading Machine	Respond to of 52237

Jeff, since division by zero is undefined, we have to use imaginary numbers, (i,j)! Just some more of the magic! gggg Paul K.

To: jeffsthoughts who wrote (14709)	8/12/2001 1:50:24 PM
From: Mark L.	Read Replies (1) \| Respond to of 52237

That brings up an interesting question that I never thought about. How do companies without earnings (and hence no PE) figure into PE estimates for the indexes? A situation where no company was making money would result in an incalculable PE for an index wouldn't it? It's actually pretty straightforward. All the earnings and losses are aggregated, and then that collective number is the denominator in the P/E. This year, however, some of the non-cash write-offs are so staggering (e.g., JDSU) that I wonder whether the people at S&P will want to make an adjustment. Certainly the situation gives ammunition to those who prefer to concentrate on operating earnings. I appreciate your making me reflect on this. I have in the past preferred to rely on "as reported" earnings, figuring that the big bath write-offs (usually cash) are a real, though perhaps overlooked, part of the picture. It's possible that even conservatives like myself ought to start concentrating on S&P operating earnings, at least for a couple of quarters.