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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: bearshark who wrote (9328)	11/7/1997 9:50:00 PM
From: Elllk	Read Replies (1) \| Respond to of 94695

bearshark In fact, a few weeks ago I remember coming across a study that found that the younger the fund managers the better they did with those under thirty topping the list. The reason---they stayed fully invested. And hardly worried. Well, they have almost never seen a down day!! BTW, my guess is that in the next life Bonnie Bear re-surfaces as Clair Voyant!! Larry

To: bearshark who wrote (9328)	11/15/1997 7:39:00 PM
From: bearshark	Read Replies (1) \| Respond to of 94695

To all: Another method to value the market. Since 1900, there have been fluctuations in the dollar value of dividends paid by the DJI stocks compared to the price of the DJI. For example, on Friday the DJI closed at 7590 and the dividends paid by the 30 stocks amounted to $133.67. The price for each dollar of DJI dividend would be $56.78 (7590/133.67). From 1900 to the beginning of this bull market in 1982, there have been many highs and lows paid for each dollar of DJI dividend. These have ranged from $36.28 in 1959 to $8.71 in 1917. The average of the highs is $33.34 and the average of the lows is $16.01. A simple midpoint between these two is $24.68. So putting them in a simple table and multiplying the current DJI dividend payout of $133.67 by the DJI dollar per dividend, we can get an idea of this method of valuation. DJI Dollar Per $ of Dividend-----------------Potential DJI 33.34------------------------------------------------4457 24.68------------------------------------------------3298 16.01------------------------------------------------2138 When I did this calculation, I was stunned. So I tried to think of some reasons. The current payout ratio (DJI earnings of $387.06/DJI dividends of $133.67) is 34.5% now. For a ten year period in the 60s and 70s (only years I have this data), the payout rate was 49%. So to take into account the change in DJI stocks over the years, I normalized the payout to reflect the 49%. That is, I multiplied the current DJI earnings of $387.06 by 49% to get a normalized payout of $189.65. Doing the same calculation as above, we get the following. DJI Dollar Per $ of Dividend------------------Potential DJI 33.34--------------------------------------------------6322 24.68--------------------------------------------------4680 16.01--------------------------------------------------3036 Any way you look at it using the historical payout of the DJI or the normalized (not really sure what else to call it) payout, the DJI is very high using this method.