Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (28486)	9/22/2001 3:54:17 PM
From: James Calladine	Read Replies (1) \| Respond to of 30051

Zeev, I never thought before that you and Santyana were speaking from the same pulpit..... Namaste! Jim

To: Zeev Hed who wrote (28486)	9/22/2001 5:18:03 PM
From: ajtj99	Respond to of 30051

For a quick glance to get fair values in a crash, you could just take the lows from Aug. 1982, apply the historical 10% return on equities to extrapolate around 800 SPX and 6400 Dow in 2003, based on a beginning base of about 100 SPX and 800 Dow in Aug. 1982. That's a little overly simplistic, but it still worth noting. It is difficult to find a better base than 1990 for the NDX and Nasdaq, so extrapolating from there it appears that with historic returns the NDX is closer to fair value than the COMPX, but this index has had lots of changes in the recent years so it is difficult to compare. If you apply these as base for fair value in a crash, I come up with around 1150 COMPX in 2003. However, 1250 seems like a more likely number. As for the NDX, I wouldn't have a clue, as we are under that extrapolated value now. Of course, these are not taking into consideration P/E or growth, which are huge factors to consider. Trendines would also seem to support 1250 COMPX as a decent level of crash support in 2003. I would caution anyone against using overly simplistic P/E's to value tech stocks without regard to earnings growth rates. Historically, tech stocks have had higher earnings growth rates and have been accorded higher P/E's as a result. I don't see why that should change in the future.