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To: puborectalis who wrote (22030)	2/5/1999 10:50:00 AM
From: Dennis Eckert	Read Replies (3) \| Respond to of 77397

On this P/E point, I'm reminded what Bill O'Neill, founder of IBD, says in his book -- How To Make Money In Stocks (CANSLIM method). His analysis showed that P/E ratios have very little to do with whether a stock should be bought or sold, and also that the P/E ratio is not normally an important cause of the most successful stock moves. Instead, analysis showed $ increase in EPS was "substantially more crucial than the P/E ratio as a cause of impressive stock performance. If you were not willing to pay an average of 20 to 30 times earnings for growth stocks in the 40 years through 1993, you automatically eliminated most of the best investments available!, O'Neill said. As for high P/E stocks that were cheap, he points out: 1) Xerox sold for 100 X earnings in 1960 before it advanced 3300% in price. 2) Syntex sold for 45 X earnings before it advanced %400. 3) Genentech was at 200 X earnings before it bolted 300% in the next five months. And, of course, we have newer examples of the same point. Also, remember that the value investors (buy low P/E's at part of their strategy) were pretty well hurt in the 1987 break. Hey, everything sells for about what it is worth at the time and that judgment is made by the market not folks like Jach.