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

To: jef saunders who wrote (19329)	5/28/1998 12:25:00 PM
From: Oeconomicus	Respond to of 94695

Yes. From the fall of '60 to the spring of '62 (after a year and a half consolidation), the S&P went from about 52 to 72 while earnings were actually falling throughout '60-'61, bringing the PE to about 23. I think the correction, which wiped out the entire move BTW, was "triggered" by the Bay of Pigs, but who cares what the excuse was, right? The reality was that a year's worth of gains were wiped out, bringing valuations back to a level that could be justified based on trailing earnings and 1962 growth. Earnings did turn around and grow again in '62 (about 15-16%), coming back up to 1956 peak earnings by the end of the year, and the market turned upward again late in the year, passing 72 again just before Kennedy was killed. BTW, this is a pretty clear example of Mr. Market NOT leading the economy. That worries me a little now because if the market doesn't peak until after earning have bottomed and if earning have not yet bottomed, I'm in deep doo doo. Bob