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Pastimes : The Naked Truth - Big Kahuna a Myth -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (3975)	8/17/1998 5:25:00 PM
From: Joseph G.	Read Replies (1) \| Respond to of 86076

The "New Era" suckers made exactly same mistake as was made in the 1920's: they took as a base the depressed earnings of 1991-1992 and extrapolated the high annual growth to 1996-1997 to infinity. But, in fact, most of the so called "long term" earnings growth was just return from depressed levels to normal business cycle peak earnings. The still optimistic, but much more correct growth rate is taking base of 1988-1989 (prior cyclical peak) to 1996-1997 -- and it's a factor of three or four less than the "New Era" rate. Of course even the corrected growth rate still neglects any global and/or systemic problems that do happen once in a while and thus provides no what B. Graham called "margin of safety".