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

To: Bill Shepherd who wrote (1213)	9/27/1998 2:01:00 PM
From: Kirk ©	Read Replies (2) \| Respond to of 15132

Bill, I agree with your analysis with the p/e ratio but BB did say he was expecting the rebound to be amoung the best and I picked number 3 of the 7 given to multiply by the benchmark low. he seemed to imply that we could see an even higher number than my calculation. There is an interesting discrepency between "operating earnings" and "earnings from operations" in how many report p/e. I find using operating earnings can mask stuff that astute investors really want to keep track of. For a very simple example, a company selling at $100 can have operating earnings of $5 a year for a p/e of 20 which includes the $5 per year from writing off employees they let go. In a few years, they will have no more employees to write off as they are all gone. IF you looked at total earnings from operations, you would see that they were not making money to sustain a reasonable p/e and you would dump before the p/e dropped. I actually used this sort of analysis to pick a time to invest in IBM and I caught their bottom at about $24/share. I can see why bb uses operating earnings, but there are arguments for using both. btw, I think the p/e peaked above 27 for earnings from operations. For me, I plan to stay fully invested until the p/e gets near the old peaks then start going to bonds or MMF again, just I will be more prepaired to the quickness that we peaked and then had the bottom fall out. Maybe pull a certain percentage at every few p/e points then I will have more powder for another correction and less risk in my portfolio.