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

To: Jacob Snyder who wrote (25469)	10/18/1998 8:31:00 PM
From: MrGreenJeans	Read Replies (1) \| Respond to of 70976

Specifically A: what is the profit growth in 1999 that would be required to have an increase in the market's PE? B: what will profit growth be in 1999? My guess is that A=10-15%, and B=0-5%. I think the odds of B=or>A are quite small. So, you don't get the sustainable upside. Instead, you get a volatile market going sideways, at best. Profit growth measured by operating earnings will probably come in at about 5-6% higher in 1999. In 1998, operating earnings will most probably come in at around $49. We will know shortly. An increase in profits of 5-6%, someone else can do the math, brings operating earnings in 1999 to around $51-$52. This scenario coupled with low inflation and low, or should I say declining interest rates, should command an equity market pe of 23.5xs which would translate to a Dow number of 9600+ or an S and P 500 number of over 1200. In short, new highs in 1999. Say 23.5xs as a pe is too high? Price earnings ratios got that high or slightly higher depending on the earnings assumed just 2-3 months ago at the market peak. With the Federal Reserve now decreasing rates I think pe's will revisit these peaks. Earnings are just one part of the pe equation from my perspective, slower growth, low rates and low inflation will all combine to move this market upwards very powerfully within the next year. I am 95% in equities, have been fairly consistently for many years...but for the life of me I cannot understand why so many posters on this thread are not as bullish particularly in view of the recent interest cuts with more cuts most probably on the way. Why fight the trend the Federal Reserve is creating? In any event, this is where I stand and I fully expect to make some major profits in 1999. Jacob I believe your analysis is incorrect and believe the bearish analysis argued by some posters on this thread are completely wrong but disagreement is what makes a market. All I can say for certain is that one of us will be wrong. Jacob, when we achieve new highs in 1999 would you mind if I repost this again?

To: Jacob Snyder who wrote (25469)	11/23/1998 9:15:00 PM
From: MrGreenJeans	Read Replies (1) \| Respond to of 70976

Jacob Snyder MrGreenJeans: re: "Low inflation + Low interest rates + Slow Growth + A Decrease in Rates + Decent profit growth in 1999 = A sustainable upside" IMO, all the requirements for the continuation of the goldilocks scenario are going to happen, except the "Decent profit growth in 1999" part. Let's be specific about this: A: what is the profit growth in 1999 that would be required to have an increase in the market's PE? B: what will profit growth be in 1999? My guess is that A=10-15%, and B=0-5%. I think the odds of B=or>A are quite small. So, you don't get the sustainable upside. Instead, you get a volatile market going sideways, at best. Jacob, looks like your prediction was incorrect.