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

To: HairBall who wrote (26587)	9/5/1998 10:20:00 AM
From: Pierre J. LeBel	Read Replies (3) \| Respond to of 94695

I do not want to scare anyone but, if you look at a chart comparing p/e ratios of the last 50 years, one may come to the conclusion that this bear market has a very long way to go. lowrisk.com A return to a p/e ratio of 15 (more or less the average of the last 50 years) would bring back the Dow Jones in the area of 5000 or so! Now, this possibility assumes that earnings remain steady. What if earnings start going down? What if banks (and that includes GE with the largest capitalization in the world) start writing off these bad loans and increase their reserves for possibilities of more bad news? And what happens if the banks no longer have money to lend for real business expansion? That brings us back to the early 80's when the p/e ratio was consistently under 10!!! That would indicate a possibility of the Dow reaching the 3000 area. WOW. And what happens if it gets worse than that and we enter a worldwide recession in 1999 as predicted by many. How many additional computers and software programs do you sell in a recession? What happens to DELL, MSFT, INTC when growth disappear? What happens to their staff who have been working for stock options that have no value anymore? It could be scary. Think about it. Pierre