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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (24654)	9/27/1998 3:36:00 PM
From: Gottfried	Respond to of 70976

Ramsey, I'm debating myself whether to download Netshow so I can view the Roach commentary. Will my curiosity win over my fear that Netshow may screw up something else? I did download the pdf file, but haven't read it yet. From the second link you provided... The question in most investors' minds is when the present correction will end. A sobering thought is that it would take a further 34% drop in the S&P index from the Aug 31 level to return the S&P 500's P/E ratio to its historical mean of 15. However, there are strong arguments to be made that the P/E ratio in the present environment should be trading above its historical mean given the bullish factors for earnings such as the information revolution, the opening of developing countries and formerly-communist countries to capitalism, very favorable macroeconomic factors such as low interest rates and inflation, and the smoother business cycle which has promoted more stable earnings growth. Bold emphasis mine. I understand that the model used by Greenspan/Yardeni allows stocks to have higher P/Es when interest rates are down. This is not subjective, unlike the other factors mentioned above. A file explaining the model is here: yardeni.com I recommend it because that's what the Fed looks at. I wonder where someone sees a smoother business cycle which has promoted more stable earnings growth.? But then I have tunnel vision because of the investments held. Thanks for the thought provoking links! Gottfried