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Pastimes : A Jackass, his PAL(indrome), and GOLD -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (525)	2/1/2003 11:27:32 AM
From: loantech	Respond to of 1210

Thanks George.

To: Crimson Ghost who wrote (525)	2/3/2003 5:18:04 AM
From: LTK007	Read Replies (2) \| Respond to of 1210

Ouote from Gail Dudack, note comment of company dividends <<Again, one of the best reasons President Bush’s proposal to eliminate double taxes on dividends should be passed is that it would set investors and companies on a sounder and better path, going forward. Consider how far from the norm we moved during the bull market. The average post-WWII dividend yield is 4.4%. The year-end ’02 yield of 1.8% is an unquestioned improvement over the 2000 low of 1%, but really should be at least 50% higher. No bull market has ever begun with a dividend yield below 4%. Or look at it another way. I can’t think of a more graphic way to illustrate the importance of dividends to investors’ long-term total returns than the experience over the last market cycle -- even though dividends throughout that span were derided as too “yesterday” and “fuddy-duddy” to matter. But from the bottom in late 1990 to now, the S&P 500, measured in terms of capital gains, did not outperform bonds. But on a total return basis, it did.>> and regards corporate bonds <<Right. There has been some stabilization, though, of quality and spreads. As I have been saying for at least the last six months, anyone who is bullish on common stocks has to be very bullish on corporate debt. And corporate bonds make better investment choices, if for no other reason than that the kind of analysis that is put into debt issues is the correct sort of securities analysis for this environment. Bond analysts don’t worry about whether a company beats consensus earnings. Their work is all about, can the company pay down this debt and how liquid is it?>> more from Gail Dudack <<As if the market is ever “fair” -- but what sort of model are you using? It is based on my favorite P/E forecasting model, which looks at the economic environment and then determines the appropriate P/E or appropriate multiple for the prospective level of earnings. The model says that with Treasury bond yields at 4% -- which is why stagflation could be a problem -- and inflation at 1.5% or so, the appropriate P/Es are between 14 and 19 times. Clearly, these things are never as precise as they sometimes appear, and if an assumption is off just a bit, things get messy. The thing about forecasting in the current environment is that we have a lot of smart people in the market who understand these valuation ranges. That is one of the reasons why, any time the S&P gets below 800, we start to find lots of buyers of stocks. So, as a strategist, not only do you have to do your regular valuation work -- looking at the indicators, looking at the charts, looking at the backdrop -- you also have to start anticipating psychology. It’s pretty overwhelming, I think, for the average investor -- and leads to more gamesmanship among professionals. That’s what I think the October-November rally was all about: “October is a bear killer. We’re entering a seasonally good period. We know a rally is coming. If the S&P gets below 800, buy it. We don’t have to love it, just buy it.” That’s what drove it….>> well that's oenough lifting--from interview on Apogee Research