To: fedhead who wrote (16576 ) 4/9/2003 11:52:10 AM From: Dave Doriguzzi Respond to In my opinion, for what it's worth, the market is either under-, over-, or appropriately valued based on current earnings and the prospect (or lack) of future earnings. Are the current earnings of whatever index you use more "peak" or "trough" earnings? From a bulls point of view it is like the old saw "buy cyclicals when the P/E's are high (depressed earnings) and sell them when the P/E's are low (peak earnings)" it doesn't sound right at first but the more you think about it, it makes sense. The bulls also believe, as Peter Lynch always used to say, that the US economy will always come back and that we will eventually recover on the earnings front. From a bears perspective, I think they believe (and I am kind of in this camp but not totally sure) that 9/11, China, post-internet bubble hangover, and certain other geopolitical/economic scenarios represent major disruptions to the US and that the current state of earnings may not improve much if at all and therefore the market is indeed overvalued and has futher to fall.
