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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: sea_biscuit who wrote (14951)	8/14/2001 4:29:27 PM
From: Kirk ©	Read Replies (3) \| Respond to of 42834

how do you account for losses due to using inflated stock to buy inflated stock that later is written off to the tune of billions? the writeoffs by some companies swamp out earnings...

To: sea_biscuit who wrote (14951)	8/15/2001 11:02:20 AM
From: Kirk ©	Read Replies (2) \| Respond to of 42834

Jen posted an article that goes a long way to agreeing with what I wrote yesterday, that P/E is not much use for evaluating cyclical stocks that are "off cycle"... The value investor in the interview she found discusses "Book Value" and why it is important suite101.com Q: Do you pay attention to the price-to-earnings (P/E) ratio? A: Yes, but P/E can be a bit deceiving because when you are dealing in small-cap value, most everything in our universe is cyclical, with earnings going up and down. And right now we have got a lot of very high P/E stocks because the earning are very low, and yet they are trading close to book value, because that's where they tend to trade when earnings are depressed. Q: So P/E for you isn't as valuable a metric as price-to-book? A: Right. Price to book and price to cash flow are more important to us. You really want to do an interesting comparison... do the book value for QQQ! :) Kirk