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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (41981)	1/4/1999 1:09:00 AM
From: Richard Nehrboss	Respond to of 132070

Coby, You can't just take Shane's ref. to a historical P/E of 14-15 as law. I find it very important to relate that to long term interest rates. I retired pretty young (28). At that time, I had to look around and figure out how best to make my money work for me, while balancing risk. If I can make 10% (not now) on a relatively safe long bond, it's going to take some pretty low P/E's to get me to take some risk on equities. I consider the current market state to be the inverse. I'm willing to pay more for the returns from equities. I do feel a little high right now though. I keep a chart on my desk graphing the S&P's historical P/E. We've been in the low 20's four times since 1935. If we pull $48 in earnings for 1999 on the S&P 500, we will be looking at a 25 PE (if we don't appreciate from here). That's high, but I believe we are in fairly good shape, economically speaking. We've been walking the inflation, deflation tightrope fairly well for the last six years, and I see long term interest rates coming down another .5 to %1. It's all based on future projections, and only time will tell. I'm just and optimist at heart. Richard