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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: David Howe who wrote (15301)	12/4/2002 1:18:50 PM
From: Steve Lee	Respond to of 19219

When you by a CD you are guarantedd to get your principal back. When you buy stocks you are not. That is why the "Fed model" is bogus. Sure, stocks are less attractive when rates are high so rates hsould make some difference. But a direct calculation of earnings yields against CD/bond yields is not valid. So, PEs may justifiably be higher than 7 at the bottom of the current bear market, but not historically high. If you had low rates in a bull market, then historically high PEs would be expected. Not at a bear market bottom.

To: David Howe who wrote (15301)	12/4/2002 1:51:05 PM
From: lurqer	Read Replies (1) \| Respond to of 19219

Completely off base. Interest rates are so low that PE ratios (on average) will not go to this level. Well note that I'm not calling for that valuation low to occur prior to '08. Do you really believe longer term rates are going to stay low? The Fed has said they plan to monetize the debt bubble. Do you understand what that does to inflation and in turn to longer term rates? I think you need to ask yourself what do you expect for inflation and longer term rates by '08? A straw in the wind. biz.yahoo.com As usual, JMO. lurqer