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To: Jon Koplik who wrote (124213)	9/26/2002 6:35:46 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 152472

that is one of the most pathetic articles i've ever read, even for the WSJ's op-ed page. Fleckenstein harshed nicely on that article last night. the whole article's about PEs, and the guy doesn't even say what the PE is (he just mentions that the adjusted PE (which he adjusts with his secret sauce that he doesn't explain), is very low. nice, context-free blather.) also, the guy relies heavily upon the tired cliche that PEs can be high because interest rates are low. this shows he doesn't know anything about the history of interest rates and PEs. Smithers has demolished this bubbleonian argument. people knock the WSJ's op-ed page for being reactionary, but i'd say they're downright liberal in terms of the opportunities they give to logically challenged bubbleheads to express their opinions. Jeremy Siegel and James Glassman also periodically write bubbleonian howlers on the WSJ op-ed page.

To: Jon Koplik who wrote (124213)	9/26/2002 7:58:48 PM
From: marginmike	Read Replies (1) \| Respond to of 152472

The guy is a dolt: Flecks response "The Market's P/E Is Low, Not High" by Marc Miles, who works for Laffer Associates. It's not spelled l-a-u-g-h-t-e-r, though in this case, it ought to have been, given the farcical nature of his "analysis," which is nothing more than just making up numbers to get the results that you want. Trashing Cash-on-the-Sidelines: Mr. Miles begins: "Bargain hunters remain glued to the sidelines by the mantra that the market's price-to-earnings ratio is too high. But bystanders beware -- today's P/E is already very low. If you wait longer, you just might miss the bull market." Sound familiar? You hear this kind of refrain all the time. Future Cents From Past Tense: Then he goes on to allow that "conventional" measures of P/Es look scary, meaning that the market appears overvalued when judged by them. He faults this perspective for just taking the past into consideration, while in his view, it's future earnings that the market cares about. His point is correct. The market does care about future earnings. But unfortunately, the future is not always so easy to discern. One can look at past earnings in order to get some sort of a guide as to what might be possible. Nobody with an ounce of brains uses P/Es as the be-all and end-all of analysis. It's just one of several tools. Elegiac on the Formulaic: For instance, one can look at the price-to-book ratio, which of course also gets dismissed, because it's too high. (During the mania, the favorite argument was that one couldn't look at price-to-book because, after all, book value didn't matter. It was a service economy.) And one can also look at the total value of stocks to GDP, as I mentioned recently. Lastly, one can look at the price-to-sales ratio. All these ratios and others have to be considered when trying to get one's arms around the subject of valuation. The Premium, in Perspective: I myself like to use price-to-sales, especially when earnings are depressed by weaker economic activity, as is the case now. According to data that I saw from ISI Group, the price-to-sales for the S&P industrials is currently about 1.5, i.e., you're paying $1.50 for every dollar worth of sales here. The P/S got to about 2 at the peak of March 2000. From 1963 to the late 1980s and early 1990s, it rarely surpassed about 1.2. So, we are still in uncharted waters