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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: sea_biscuit who wrote (2003)	11/6/1997 3:08:00 AM
From: Alan Bell	Respond to of 42834

Recently, Bob has been talking a lot about PE ratios, earnings, etc. On the another thread, Bonnie Bear posted the following link which examines the Fed's model of valuation. Many of the ideas are similar to what Bob has been saying. yardeni.com

To: sea_biscuit who wrote (2003)	11/6/1997 12:11:00 PM
From: Kirk ©	Read Replies (2) \| Respond to of 42834

RE: One possible explanation is that a few of the investors heard "total" return and gave an answer like 200%. Most others heard "annual" return and gave an answer like 12%. The above scenario is consistant with the average = 34%, while the median was only 15%. Where is this information available? Again, I find it hard to believe that 12% to 15% is what the average investor expects! ---------------------------------------------------------------------- My UNDERSTANDING is that the Wall Street Journal questioned the results of the Montgomery Survey, thought the survey was poorly worded and did one of their own and then there was specualtion about what people really thought with the Montgomery Survey. Does anyone have a subscription to WS Journal Interactive? You could do a search and report back.... Kirk out pw2.netcom.com

To: sea_biscuit who wrote (2003)	11/6/1997 9:14:00 PM
From: Investor2	Respond to of 42834

RE: "Where is this information available? Again, I find it hard to believe that 12% to 15% is what the average investor expects!" The first survey that Bob mentioned (I forget who gave the survey, was it Montgomery?) indicated that the average of the responses was 34%. Let's take an example to illustrate my point. Suppose the sample population (the number of people poled) was 3 and the answers were as follow: - Person 1, who understood the survey question to be "what will be the average 'annual return' of stocks during the next 10 years?" responded by saying that he expects a return of 10%. - Person 2, who also read the survey question as the "annual return" expected during the next 10 years, responded by saying that she expects a return of 12%. - Person 3, who read the survey question as 'what will the "total return" of stocks be for the next ten year period?" responded by saying that he expects a total return of 80% (total over the next 10 years). The above numbers are just an example. I'm not saying that those numbers have anything to do with reality or peoples expectations. But, look at the numbers: 10%, 12%, and 80%. The average of these three numbers is 34%. The median number (i.e., the number in the middle) is 12%. So, my point is this: If a certain number of people misunderstood the survey to be asking for the "total return over a 10-year period," the survey results are skewed. According to Bob on his last show, the original surveyor indicated that the median of his answers was 15%. Since the average is much higher than the median, this would suggest that most of the answers were relatively low (in the 10 to 15% range), but a few answers were very high. That is the only way you can get a median value so much lower than an average value. So much for statistics. I2