jcrash

Crazy P/E Ratios

Zoeey and tcal - Schillers data shows currently we are about at 15 or 16 based on 10 yr average earnings.

Overcorrections to single digits as you propose do no happen in every downturn and actually only happen about 3 times in the last 90 years. One of those was the decade of inflation, one was the WWII era, and one was briefly during the depression.

However, the greater macro trend you are ignoring is the greater participation in the stock markets. More capital chasing the same earnings means higher P/E's. So, if we get to single digits, I'd be more than shocked.

Technically, 8000 on the Dow and 850 or so on the S&P looks pretty impenetrable.

Boomers are committed at this point, if they take it out now, they are pretty much sure to miss the start up and then pile in to create one hell of a bounce. If they stay in, they will be committed to adding even more at these levels.

Additionally, recent tax changes have created a large demand in college savings accounts. Those monies are relatively new and will continue to grow with acceptance. Finally, while you might think foreigners would desert us, the truth is that their is no substitute - no country with a better combination of innovation/security and size. This is quite in evidence this week with the turn in the Euro and the European banks.

We will print up as much as it takes to keep the boat afloat and folks will buy it and be glad their money is safe in times like this. They cannot leave us in the bad times - they will have to wait and try it in the good times.

Crazy P/E Ratios

So, GKM are you saying P/E's look low or P/E's look high?

Contrarian Indicator: Analyst Buy Ratings

Bah, you take the average of ALL of those on the bottom, and place it against the performance of AAPL over the next 12 to 24 months. It will be a stark contrast.

Let's see
Choicepoint has a P/E of 53.6
BEAS is at P/E of 25 based on 2010 earnings!
E*Trade? Toxic...High risk reward obviously.
Circuit City? Please, no one goes there anymore.

Or you can have AAPL with a P/E of 25, and $25 per share cash growing sales at a phenomenal rate with margins that are still increasing due to component oversupply. I don't own much, but I'd own my little piece well before any of those others.