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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Doppler who wrote (4639)	9/20/2001 9:45:21 PM
From: John Pitera	Respond to of 33421

You don't want to know Doppler....but since you ask at the bottom of this post are the numbers from a few weeks ago. And remember with the Price to Earnings ratio's there is this pesky issue that Pro forma earnings reporting is overstating earnings, and the PE's are even higher than what is below in bold.. Oy Vey... Message 16265030 According to today's Barrons, The DJIA is selling for 7.93 times book value. The S&P 500 is selling for 5.91 times book value currently. The DJIA has a PE ratio 26.43; and the SPX has a PE ratio of 26.08. Note that both Interest rates and the Inflation rates are much lower than in 1982, and hence stocks are worth more when other rates of return are lower. they are getting a bit better, as stock prices go lower, but then earnings are still going down. One reason this is not the end of the world is that earnings will start to rebound in a few Q's and the earnings comparisons will be very, very easy for many companies. So if a company doubles or triples earnings off of a recession earnings trough level, it works to cut the P/E's Down quite a bit. the Price to Book numbers are still up in the clouds, but there is so issue that book value may be a little misleading for many modern businesses, that do not have as much plant and equipment, as the industrial era had. Intellectual capital and processes may not be fully reflected in book value numbers, but then again the we're 5 and 7 times book value, and some of that is overvaluation. John