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To: Lee who wrote (34421)3/15/1998 1:40:00 PM
From: Chuzzlewit  Read Replies (1) | Respond to of 176387
 
Lee, all you need to do to figure it out is to say to yourself that

1) a dollar tomorrow is worth more today if interest rates drop; and

2) companies have good prospects for better earnings tomorrow and better cash flow.

What's more, demand for goods and services tends to be higher when interest rates are low, because consumers look at total costs. To me, its a classic no-brainer!

Regards,

Paul



To: Lee who wrote (34421)3/15/1998 1:41:00 PM
From: Jorge  Read Replies (2) | Respond to of 176387
 
There was a point, I think 1960 although I would have to look it up for accuracy, where Xerox was trading at a P/E of 100....If someone elected to stay out of Xerox because of their P/E they would have missed out on a 3200% increase in share value over the next 3-5 (?) years, split adjusted, etc......A low P/E may simply mean a company is not doing very well...A high P/E may be well deserved........George