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To: jbn3 who wrote (85670)	12/16/1998 12:58:00 PM
From: T L Comiskey	Respond to of 176387

Bachman..........you are a breath of FRESH AIR........these last 2 dozen posts have saddened me........been far too much salt and vinegar in the air.........thanks for tweaking the thread.......Good Fortune to You....(read Peace of Mind)........Tim

To: jbn3 who wrote (85670)	12/16/1998 1:12:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Good morning Bachman, I think that many of those concerns are valid, but I would like to point out some issues with P/E and valuations. The traditional method of valuing a capital asset (either a stock or a company) is to estimate its disposable cash flow (cash flow that is thrown off by operations that is not needed for sinking funds or for working capital purposes), and to discount those cash flows at a suitable rate. The rate generally has two components: the risk free rate of return, and an adjustment to reflect the riskiness of the estimated cash flows. This approach is quite sensitive to the current long term interest rate and the prospects for future cash flows over the life of the investment. It is also more sensitive to near-term earnings fluctuations than those that are further out. That means that the model predicts that a year or two of rocky earnings ought to have an impact, but not nearly as great an impact as the current market environment tends to give it for tech stocks. On the other hand, stocks like KO totally baffle me, because, under the best of conditions I don't see all that much growth potential. My conclusion from all of this is that the market has attached a very high risk premium to stocks, and at the same time has created a mirage of absolutely unreasonable cash flow expectations down the road. Perhaps this is all by way of rationalizing the manic nature of the market. But I, too, am selling covered calls against all of my positions. TTFN, CTC

To: jbn3 who wrote (85670)	12/16/1998 1:31:00 PM
From: Lee	Read Replies (2) \| Respond to of 176387

Hi Bachman,..Re:. The average citizen is becoming more and more savvy (or greedy), and is no longer satisfied with earning ~5% on a CD Bachman, thanks for your remarks. They are as usual thoughtful and thought-provoking. Also, with all this political BS, it's nice to see some fundamental reasons for investing or not. Makes us almost want to see some posts from LT so we can shoot him down again! <vbg> If we consider that the long bond PE is approximately 20, and consider that for forward earnings, the S&P is only about 25, then we might reasonably conjecture that that is a reasonable premium to pay for the increased dividend. Besides, who is going to put funds into long term debt when the likes of AMZN are around? Not to mention the past three years returns. Even with the current layoffs, the jobless rate decreased to 4.4% from 4.6% last month. Obviously, not all of the laid off people can re-train and capture new employment readily but those that can will be employed quickly. This is an on-going re-establishment of job skills and those that can adopt to the new technical requirements will do well. I guess what I'm trying to say is that we're in a rolling modification of old time industrial employment standards to new era technical standards. It's not hopeless, there are lots of opportunities. Consumer spending has been healthy, primarily due to the full employment but also due to rising wages. I was worried about it earlier because of the layoffs but, as yet, it has only showed up as a temporary blip in the consumer confidence survey. You are correct when you say that the market internals are deteriorating and this is a good reason to take precautionary measures. quote.yahoo.com Thanks for your thoughtful post and please keep it up. Regards, Lee