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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area -- Ignore unavailable to you. Want to Upgrade?

To: Patentlawmeister who wrote (4076)	9/23/2003 1:05:21 AM
From: PuddleGlum	Read Replies (2) \| Respond to of 37387

But one of the problems with forward p/e's is that they are only predictions. And they usually have a lot of recent history factored into them, so I suspect that a year from now we might look at a trailing p/e of 30 when we were expecting it to be 40. Ken Fisher, who writes for Forbes and has done some serious studies on the matter, has long held that p/e really doesn't matter when forecasting stock prices. I used to follow p/e much more than I do now, but I've been converted by Fisher and the Crossy School of Business.

To: Patentlawmeister who wrote (4076)	9/23/2003 11:16:55 AM
From: michael john stout	Respond to of 37387

cuda- the forward p/e you're referring to is based on "pro forma" earnings. IE take out every expense you don't like, regardless of whether or not it's recurring. It's that magic that has allowed AMZN to fleece billions of dollars out of the capital markets. Not sure what the forward p/e on nasdaq 100 would be with S and P core earnings, the preferred measure, used. My guess would be 100 or so.

To: Patentlawmeister who wrote (4076)	9/23/2003 11:18:13 AM
From: Carl Worth	Respond to of 37387

first of all, my post wasn't really a bullish argument, giving a "fair value" of 2000 to the nasdaq is hardly bullish, that's less than 6% above the current price...my point was more that giving it a fair value of less than half of its current level, and over 30% below the significantly depressed levels of last october, is absurd when you use only one measure of valuation, i.e. P/E in this case, you eliminate the rest of the information about a company and its stock, to the detriment of your model IMHO...as i said, you have to take into account the company's growth rate, tangible assets, long term outlook, product pipeline, etc. in making any legitimate decision on whether a company (or an index) is under or overvalued as an example, you cite historical P/E's and compare them to T-bills, and people compare the current P/E's to what has been the historical mean for the overall market...the problems with these approaches are numerous, but the main one is that historical P/E levels are based on decades of track records of companies that grew at much lower rates than the current technology companies that make up the bulk of the nasdaq....to say that a company like CSCO should be valued in the same way as a company like BAC or GM is illogical...i would submit that never in the history of the world have there been companies like CSCO, INTC, etc. which can do billions of dollars in sales per quarter and yet maintain margins well in excess of 50%....you can't value these companies the way you value old line industrial and consumer companies finally, the point of my post is that you have to look at each stock individually, and you have to find the opportunities that fit with your investing style...whether or not EBAY or AMZN or YHOO are overvalued, there are still hundreds of companies out there trading at reasonable valuations, with outstanding products and growth prospects, which have the potential to provide superior returns to the owners of their shares over the next 12 to 24 months....it's basically the forest and the trees example, you aren't buying the forest anyway, so focus on finding a few trees that will grow nicely in your portfolio, and leave the rest of the forest for someone else carl