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

To: Boca_PETE who wrote (6377)	8/4/1998 9:35:00 PM
From: E_K_S	Read Replies (2) \| Respond to of 42834

Hi Pete - I believe Mr. Brinker used $46 for his 1998 S&P 500 earnings estimate. At an S&P close of 1072.12, the S&P is valued at 23.30 PE, still quite a high number historically speaking. Perhaps the market was due to have a relief correction to (1) allow the individual investor to experience "fear" and provide a reality check on their complaisant investing, (2) adjust the expected "real" earnings growth to reflect the strong U.S. dollar (have you noticed how strong the dollar is vs the Canadian dollar?), (3) better reflect nominal wage growth (and the impact on future corporate earnings) in a low inflationary economy and (4) investor GREED!. I would not think it would be unreasonable to see the S&P correct to the 21 PE level if not lower. That would put the S&P at 966 using Bob's $46 earnings number. Many of the other indicators that Bob utilizes in his market timing model continue to remain positive. As a fundamental "value" investor, I still believe the market is historically high even at a market PE of 21 which represents an S&P of 966. I personally feel a lot more comfortable with a market PE of 15-20. When you do the calculation for 1999 earnings, a small deviation in your earnings growth estimate can yield a significant change in expected earnings and forwarding looking PE. It appears to me that the market is in it's "natural" process of discounting all the forward economic factors to arrive at this new valuation. When the dust settles, I believe the low inflation and low interest rates will continue to move this Bull market higher. IF the market Guru's and pundits start recommending Gold or shifting all your money to T-Bill's (because of the pending market crash), then it will be time to load up on those S&P Spyders. I do not think we are quite there yet. EKS

To: Boca_PETE who wrote (6377)	8/4/1998 11:35:00 PM
From: Investor2	Read Replies (1) \| Respond to of 42834

To All: Calm down a little bit. Stocks prices tend to fluctuate. That's why stock investors get the big payoffs; we accept the market risk. Don't panic; it decreases the profitability of your investments. If you have an investment plan, stick to it. If you don't have an investment plan, you need to develop one, but not while you are in a state of panic. Best wishes, I2