Forum Archive Index - July 2002

["Richard Hooper" <hoop@ihug.co.nz>]

I have been saying this for the last two months......P/E is the key....until the P/E is down around 10 maybe as low as 4 ( if the average for the last 50yrs is P/E 8). Mathematically  P/E has to drop below 8 to keep the average.  P/E has been as high as 40 ...so a P/E of less than 8 has to be be a reality...............whether this happens all at once or stretched out over a period of years ...who knows..

Good news ...........US companies on the whole seem to be coming in with good profits results....helps the P/E..

USA growth is always been excellent  due to good government ( wish NZ govt would take notice). So it should not take too long for the market to  correct .....say another 2 to 3 years..

Hoop

----- Original Message -----

From: geoff_julie

To: sharechat@sharechat

Sent: Friday, July 19, 2002 10:30 PM

Subject: Re: Re: [sharechat] WHere have all the fullas gone....

Hi Morgy

 

great reply, enjoyed reading your thoughts / comments!

 

I agree, other forums appear to have a few interesting characters and comments but many of the comments are pretty ordinary bordering on nonsensical and / or ramping.

 

As the old adage goes - quality over quantity!

 

 

Regards

 

Geoff Walker

 

ps    I'll add my 2c worth, slightly off topic.  I'm picking further big falls in the Dow and NASDAQ, down to say 6,500 - 7,000.  Reasons, current Dow average PE of 26 (refer to CNN, estimated) are based on current highly inflated profits that we all know are garbage.  Dow has traditionally traded between 10-15 PE's.  Consumers are heavily indebted, consumer confidence is slumping, manufacturing slipping, interest rates only have one way to go - up, dollar falling thereby enticing overseas (i.e. Japanese) holders of US debt to repatriate their monies forcing US dollar and markets down further, and to cap it all off, huge twin trade and budget deficits.  NZ ain't such a bad place after all (unless the Greens & Labour have control....)!