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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (26397)	2/3/2002 12:21:54 AM
From: exp	Read Replies (2) \| Respond to of 99280

Re: Fair Value of NAZ: 1619. I attempted to reproduce the models, yardsticks, and arguments commonly used by Wall Street research depts (see the Yardeni site as an example) and still show that NAZ is OVERVALUED by some 300 pts (15%). Given the fact that we are still in a period of valuations above historical norms, NAZ is unlikely to fall below 1619 for a prolonged period of time in the intermediate term. The arguments in favor of LOWER fair NAZ values may gain currency in the longer term when we return to historical valuation norms. BTW, Bill Gross had a graph in his Nov 2001 piece showing a very close relationship between historical SPX P/E values and the inverse of an inflation measure. Also, the quoted SPX 2002 estimated eps are close to those of First Call and Standard and Poor's. Ultimately, I believe that an insight into Wall Street's way of thinking and evaluating markets is very beneficial to individual investors. P.S. itsallover: your arguments make a lot of sense but Wall Street makes the final calls on their validity at any given time. Of course, Wall Street may change their view of pro-forma eps, etc. at any time which would obviously significantly alter the fair SPX and NAZ values.