Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (31)	3/4/1998 7:47:00 PM
From: seminole	Read Replies (1) \| Respond to of 1722

porcupine << Graham saw these aggregate Market valuations as an indication of the relative attractiveness of bonds >> Exactly, the aggregate market valuations of large cap stocks is poor when compared to the safety and yield of intermediate term bonds. I have not bought a large cap stock for three years and have sold my positions in Merck, Ford and Kodak. Now, this does not mean that I am hiding in bonds. I am fully invested in small stocks with good valuations. Hey, it has been wonderful to be invested in large cap stocks. Hey, it is alright to be a momentum investor. "There are no sure and easy paths to riches in Wall Street or anywhere else" (Benjamin Graham) I try to slowly follow my own path. Give me enough time and I will make it. Good Luck, Buy Low richard

To: porcupine --''''> who wrote (31)	3/5/1998 1:15:00 AM
From: Berney	Respond to of 1722

Porcupine, Life and the Market gets very interesting. Alas, one of the big boys, and, as you know, one of my favorites has warned of a rotten quarter. Folks will be crushed in the stampede to the exit doors. But then, it had to happen! Let's try to put this in perspective. Last summer I did an analysis of all 500 companies in the S&P. How many were able to achieve annual EPS growth over a 5 year period. The answer was 79 or 16%. The other day I got bored and did the same analysis for the DJIA stocks. The answer is 11 or 37%. In fact, only 4 DJIA companies were able to accomplish annual EPS growth and double their revenues (MRK, WMT, HWP, and TRV). Yet, investors go radical on a quarterly basis -- lemmings rushing to the sea. It will never cease to amaze me that we attempt to monitor this quarterly ritual and yet so few can even accomplish the task annually. Bill Gates was on the Charlie Rose show this evening (being filmed at one of your local libraries). He estimated that there are currently about 200M computers and that it is totally possible that there will be 1B in 5 years. Think about that! If my math is right, it represents about a 40% annual growth rate. Berney

To: porcupine --''''> who wrote (31)	3/5/1998 2:06:00 AM
From: Berney	Read Replies (1) \| Respond to of 1722

Porc, It seems that each of our goals is to create the "Margin of Safety". We each choose a different manner to accomplish this objective. As you know, I utilize a 15 point scoring system. One of the factors is whether the TTM PE ratio is less than the projected growth rate of EPS. I will be the first to concede that I believe the DJIA stocks are unique in that the Return on Equity is more important than the PE ratio. However, let's look at how the PE of the DJIA compared to their EPS projected growth rates: EPS PROJ SYMBOL PE GROWTH RATIO GM 8.0 7.8 1.0 MO 16.9 15.6 1.1 CAT 12.5 10.2 1.2 S 17.7 14.4 1.2 UK 10.3 7.9 1.3 AA 15.7 11.6 1.4 MMM 16.9 12.1 1.4 UTX 21.2 14.8 1.4 ALD 21.1 14.3 1.5 HWP 22.8 15.3 1.5 TRV 21.9 14.6 1.5 AXP 21.7 13.8 1.6 IBM 17.4 10.8 1.6 JPM 16.7 9.5 1.8 MCD 23.8 13.0 1.8 CHV 16.1 8.3 1.9 GT 19.3 9.2 2.1 DIS 39.0 17.5 2.2 WMT 29.7 13.2 2.3 JNJ 31.3 13.8 2.3 MRK 34.1 14.3 2.4 KO 41.8 17.3 2.4 GE 31.6 13.0 2.4 T 21.5 8.6 2.5 PG 32.8 12.9 2.5 DD 29.5 11.3 2.6 XON 18.9 6.9 2.7 EK NM 10.5 NM IP NM 6.6 NM BA NM 18.0 NM But then, the next few days could radically change these ratios. Berney