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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (1210)	9/26/1998 11:10:00 PM
From: Gary D	Read Replies (1) \| Respond to of 15132

>>BB is looking for one of the BEST increases from the low of a "midterm Off Presidential election year correction". If I am reading what BB says on the radio and add that with the newsletter numbers, then BB is looking for the next advance to be above 50% from DJIA 7539 and for that to happen over 6 to 24 months. Do others read the newsletter numbers and todays optimismn the same way?<< Kirk, I heard that statement today and have seen the numbers you're referring to, and would make the same interpretation--but, what about our p/e ceiling of 24 or so?? It would seem that, for everything to be consistent (if my arithmetic is correct), either 1) Bob must also be expecting earnings reports over the next year or two that will be a big surprise on the upside, or, 2) the impressive gain ahead will peak with a spike that pierces the p/e ceiling for a brief time. Or perhaps a combination of the two. If scenario 2) is what happens, I'll certainly be ready with my finger on the trigger this time. Regards, Gary

To: Kirk © who wrote (1210)	9/27/1998 1:13:00 PM
From: Bill Shepherd	Read Replies (1) \| Respond to of 15132

re: I get DJIA min of 12,000 before 24 months expire..... of course, he is staying "conservative' with DJIA 9500) Kirk: DJIA of 12000 sure would be something to see! I think you may be a little optimistic, using BB's figures for mid-term elections. As you know, BB indicated that over the past several mid-term elections, the subsequent "rebounds" in the market ranged from 20% to 92% over a period of 6 to 39 months. Thus, using the most conservative of BB's figures, we could see only 20% from the lows of 7539, which give a market high of about 9100. What's missing from all this discussion is the P/E ratio, which seems to be the ultimate governor on this market--we only had a brief flirtation with a P/E of 25 on the DJIA, and quickly left that lofty territory. Supposing we see a P/E of 25 again, we would need earnings of about $60 on the SP500 to reach the 12000 DJIA level. This $60 earnings figure would be a 20+% increase over the current estimate of $49. So...the question is, do you think earnings will increase over 20% in the next two years? AND, do you think the raging optimism that lead to the P/E of 25 will repeat at the same time? I will agree with you, Kirk, on BB's optimism during yesterdays show. He seemed to be bubbling with enthusiasm over this market. And, as he noted after the call from the woman (from Palo Alto, I believe) who had been bearish since DJIA 5400, he was too kind in not asking her "where has she been during this market??" ;-) Regards...Bill S

To: Kirk © who wrote (1210)	9/27/1998 8:10:00 PM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 15132

Kir: Re: "BB is looking for one of the BEST increases from the low of a "midterm Off Presidential election year correction". If I am reading what BB says on the radio and add that with the newsletter numbers, then BB is looking for the next advance to be above 50% from DJIA 7539 and for that to happen over 6 to 24 months. Do others read the newsletter numbers and todays optimismn the same way?" While anything possible, I think it is important to state that Brinker made no such market call. Let's think about it. But in order to do so, let's assume we are at January 1, 2000. A gain of 50% off the S & P lows of 957 would put us at S & P 1435.50. Brinker projects operating earnings of $51.50 for 1999 so at 1435.50 we would be nearly 28x trailing operating earnings at the end of 1999 should we achieve those numbers. On the other hand, if we assume that 24.5x is the ceiling on operating earnings, the operating earnings for 1999 would have to be $58.57 for 1999 in order to get us at 1435.50. So, in order to get us to 1435.50, we have to either have a multiple expansion above the historic highs or we have to have earnings at 13.8% higher than projected by Brinker, or a combination of both, all coming before the end of 1999.