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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: LindyBill who wrote (14956)	1/22/1999 6:39:00 PM
From: 16yearcycle	Respond to of 74651

I think looking at the s&p pe instead of the dow is a mistake. It is the dow that has the long term record of a pe at around 15-16. The s&p has evolved into a more tech heavy index with much faster growers that are delaying earnings for market share expansion. And the tech heavyweights now have huge market caps which tilts the s&p pe even higher. The dow has a trailing pe of only 23, and even with almost no growth this year, has a forward pe of about 22. This is not out of line historically at all. In 1987, we had a dow pe of 24, but interest rates were 4 POINTS HIGHER. I think the dow represents the market better. If one feels that is not satisfactory, then combine the russell and the s&p. That will also bring the pe's down. In the last 16 months, the dow is up about 10%. That is not very much in a low interest rate environment. The market continues to have pockets of excess, and the heavy involvement of lay people now investing their savings is very frightening. But I will be a bull until I see interest rates rise.