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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: Robert Douglas who wrote (268)	9/1/1998 6:54:00 PM
From: James Clarke	Respond to of 4691

Good point Robert. I look at things the same way, except I think in terms of ROE instead of margins. But with the same conclusion. 19% ROE on the S&P 500 is historically unprecedented and unsustainable. So when you hear these Wall Street strategists say that the market P/E is appropriate, or even undervalued, given the level of interest rates, hold onto your wallet. A P/E ratio can rise in two ways. Either the price goes up or earnings go down. Looking at the world economy and looking at capacity build in industry after industry, I would bet on the E taking its revenge over the next few years.

To: Robert Douglas who wrote (268)	9/10/1998 6:40:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 4691

Value Investor Workshop September Update The September Market View of the Value Investor Workshop has just been posted. These are very wild times for global markets. I hope you enjoy my insights. Please visit. Wayne Crimi September Issue - members.aol.com Homepage - members.aol.com

To: Robert Douglas who wrote (268)	9/10/1998 6:47:00 PM
From: Freedom Fighter	Respond to of 4691

Robert, >>>You left one very important thing out. Profit margins. Profit margins have been expanding the last several years and are now at the level where I would deem them "unsustainable". That means you have a high P/E on unsustainable profits. Not a good combination.<< You're correct on all fronts. I did accidently leave it out. It's a very important insight that I'm glad you both noticed and pointed out. It's not a good combination. Wayne