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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: RobertHChaney who wrote (46403)	9/10/2001 12:56:53 PM
From: paul_philp	Read Replies (3) \| Respond to of 54805

Robert, As an antidote to the megabear case, I suggest keeping in mind that - 1) Interest rates are low; 2) Historically, unemployment is very low; 3) The world is at peace (by and large); 4) The pace of innovation is accelerating. Although this quarters fundamentals look lousy, these core fundamentals indicate to me that it is unlikely for a mild recession to become a long drawn out serious financial collapse. Paul

To: RobertHChaney who wrote (46403)	9/10/2001 2:19:42 PM
From: Bruce Brown	Read Replies (2) \| Respond to of 54805

Bruce - Thanks for fascinating "MarketPlayer.QuantView analysis link. It is a very interesting analysis and demonstrates why PE and other key ratios cannot be viewed historically on a stand-alone basis. Part of Buffett's teachings in the past have discussed the importance of the constant struggle for investor's funds between stocks and bonds. No problem, Robert. It's always important to factor in the yields of bonds, interest rates, dividends and inflation when arriving at 'fair valuation' for a 'mean average' of price to earnings multiples. No two recessions or business cycles are exactly the same. This one was a whopper for capex related technology companies due to the overcapacity that was built up in the expansion phase. Yet, inflation is quite tame and the interest rate environment is low single digit. Not all of those companies created in the expansion phase will survive, but that makes the process easier for us to determine the leaders in segments that still have a long way to go in their product adoption life cycle. A P/E of 7-8 on the S&P? It's true that earnings estimates continue to come down which leads to the correction in share prices, but we'll see what unfolds in terms of the 'mean average' for the S&P. Remember that the dividend yield on the S&P in the 70's was much higher than it is today which leads to a higher 'mean average' of P/E multiples today. BB