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

To: Trading Machine who wrote (17570)	9/3/2001 3:38:41 PM
From: BirdDog	Read Replies (1) \| Respond to of 52237

...if a company has a real P/E of more than a single digit, they have some pretty wild expectations. And anyone who "lends" them money is foolish. I'm wondering what you think the P/E of a company should be who is eating up P/E at the rate of 4 years per market day? I especially think Lee has entertained us this weekend in complaining about a high P/E in the S&P and the high tech "bubble". While at the same time bragging about food service and other companies almost doubling in the past year... meanwhile we know they didn't double in size in the last year. They don't have the slightest hope in the universe to obtain that kind of growth.. That is what I call a bubble.... On Greenspan.... I understood he didn't vote for the last rate hike in June 00. He was out voted. I think it was more of a statement the Fed wanted to make to old economy companies to quit spending money on IT. I think it was made clear to them to quit that spending, otherwise the Fed would keep raising rates until those companies were hurt badly...so in otherwords; sacrifice IT for your own survival. Please try to tell me that most of the past year they didn't have money to spend on IT...nobody was having any problems...they just quit spending. They created our slowdown to save themselves... BirdDog

To: Trading Machine who wrote (17570)	9/3/2001 5:57:50 PM
From: Lee Lichterman III	Read Replies (2) \| Respond to of 52237

Good points all and I love this discussion, it's been a while. I agree that we are all gamblers but the gambling used to be and will again be based in some part on FA vs the TA we had to rely on once FA went out the window in from 98 to 2000. There were no measures of a company's worth once we used up the "next year's PE, then two years forward PE, cash flow, page views, Pro Forma earnings yadda yadda. Of course it has always been gambling since none of us know what a company will earn in the future. I am sure buggy whips seemed like a sound investment before the spread of the Automobile. Long distance telecom was a main stay of every retired person's portfolio before free long distance cell phone service, internet calls etc. Yes we all are gamblers but the market has been a game where the "informed" investor had a fighting chance. That leads me to Gersh's response. Gersh, I agree that the game is rigged for the broker. The one that said stocks are a zero sum game is wrong. The pit takes a percentage and the broker takes a percentage and then factoring in slippage the buyer and seller after the IPO is always losing a little bit. Regarding Dividends. Yes, I too baited. Of course dividends aren't the only reason for owning stocks but that is the basic premise of the ownership. Hopefully one picks a stock that has future growth and overcomes the effects of inflation. Then in inflation adjusted dollars, the stock goes up in value while paying dividends along the way. For older investors, teh idea is to get a portfolio spread out enough so there is a monthly check coming in from various dividends, maturing bonds etc and then when you die, your kids inherit a stock that is worth more than you paid for it. At that point they either hold for their own retirements or sell them for higher growth riskier plays that fit their age and risk level. As for the transports, foods etc growing so fast. Yes some have gone too high but as I stated earlier. Money was being diverted away from "real" companies in the Dot com and B2B craze thus they were selling for below book value in many cases. The rapid rise in these was just a return to sensibility in many cases as they ran up on real value for a while then the mo mo crowd jumped in and took them a little farther. Note that the charts of these are almost identical over lays of the Advance Decline that bobby beara mentioned. We were robbing Peter to pay Paul and now Paul is getting his money back. Gersh - Of course we wanted un-employment to go up. Once you become an investor, you cross the line and become one of the immoral corporate raiders! -gggg- The economy does best with an unemployment rate between 4.5 and 5% so J6P can't force a raise in salary knowing someone else is waiting in line to take his job. Low wages help profits and profits raise stock prices. In a utopian society everyone would work but if the labor market was that tight, everyone would want and get a raise and inflation would take over. Unemployment, wars, famine etc are necessary evils for a successful market but this is a whole can of worms that shouldn't be debated too much a day before the market re-opens. -g- Without a common enemy, we would have no reason to keep the defense contractors humming and no one to keep BA open in between airline contracts etc. Many of the world's best technological ideas were made in labs geared towards war. GPS, the internet, large aircraft, even computer science. We will always find a patsy enemy of convenience. The iron wall fell and we grabbed Iraq. If we made up with Iraq tomorrow we would pick on someone else within hours and come up with a press friendly propaganda spin to justify raids and defense spending by the next day even if it was a Quaker society based on isolationism. That is just the nature of the beast. If we had world peace, nations would lose trillions in defense industry GDP and job layoffs would be massive not to mention that science research grants would be cut drastically. It isn't a pretty picture but it is the nature of the beast. Have to run to town to get more rafter hangars. Again, great debate this weekend. I love when this thread comes alive!!!! Good Luck, Lee