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To: Mohan Marette who wrote (86362)	12/21/1998 12:37:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Mohan, the fixation with P/E is absolutely crazy. It was created by Ben Graham as a shortcut for valuation of companies with little or no growth. As anybody with any sophistication in finance or economics will tell you, the thing that drives stock prices is the expectation of future cash flows -- NOT the earnings in the previous year, or even the earnings in the current year. One of the ways I like to poke fun at the concept is to verbalize what it actually means. Thus, "The P/E is what a dollar in last year's earnings costs today". What lunatic invests with the idea of buying last year's earnings? Some of the other questionable shortcuts that are in widespread use are book value per share, and sales per share. These metrics work okay for slow growing utility companies, but are absolutely useless for growth companies. TTFN, CTC