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Strategies & Market Trends : Nasdaq 100 Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Alastair McIntosh who wrote (25)	12/11/2001 11:36:59 AM
From: TimF	Read Replies (1) \| Respond to of 238

Based on PEG ratio techs are more overvalued now than they were at NASDAQ 5200. I would think the main thing that shows is the weakness of relying only on PEG ratios to make you investment decisions. Tim

To: Alastair McIntosh who wrote (25)	12/12/2001 10:57:58 AM
From: David E. Taylor	Respond to of 238

Alastair: The current forward P/E [S&P 500 Technology] of 43 is approaching the 2000 high of 47 IMO, this is a virtually useless observation from an investor's point of view, since both the current P/E of 43 and last year's "high" of 47 is/was based on analysts' consensus forward estimates of earnings and not actual earnings. Last year's forward P/E high of 47 was based on the then forward estimates for 2001, which turned out to be at least 100% too high (more for some tech sectors), so the "real" forward P/E last year would have been well over 100 if the analysts had actually got their forecasts correct at the time (and I doubt many investors would have been buying tech stocks if that had been the case!). The present P/E of 43 is based on the present forward estimates for 2002, which, according to the Yardeni report you linked, will be up 14.5% from 2001 but still only back to 1995 levels. If the estimates turn out to be correct, then the P/E of 43 number will also turn out to be correct. But if the real earnings for 2002 were to come in say 100% higher than current estimates, then the real forward P/E would be around 21. I'm not saying that's going to happen, just pointing out that the comparison is not much use since it's based entirely on actual, current "P's" but only guesses for the "E's". David T.