Years ago, when I was a young man, P/E ratios on stocks used to be in the 7 or 8 rang

Discussion in 'Economy' started by Neubarth, Nov 8, 2008.

  1. Neubarth
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    Neubarth At the Ballpark July 30th

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    Years ago, when I was a young man, P/E ratios on stocks used to be in the 7 or 8 range.

    Right now, they are in the twenties. They were a lot higher.

    If stocks continue to fall to a P/E Average of 8 or 9, they will have to come down over 50% more in price.

    Could happen.

    Not saying that I know for certain that it will. Right now, I would not trust the stock market.
     
  2. Toro
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    Toro Diamond Member

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    The S&P 500 is trading at 20x earnings only because financial firms have written down hundreds of billions of dollars.

    Of the 500 companies in the S&P 500, 204 are trading at below 10x earnings, including 174 nonfinancial companies.

    Companies trading at or below 10x this year's operating earnings include Harley-Davidson, Coach, Carnival, Tiffany & Co, IGT, CBS, Time, Disney, ConocoPhillips, ExxonMobil, Pfizer, Merck, Wyeth, Ingersoll-Rand, Caterpillar, Honeywell, GE, eBay, Dell, HP, Texas Instruments, Microsoft, and AT&T.

    [​IMG]

    [​IMG]

    [​IMG]

    America is on sale.

    This is the cheapest market I have ever seen in my career and I have been buying stocks as long-term investments.
     
  3. editec
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    editec Mr. Forgot-it-All

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    Odd that nobody ever looks at PE ratios as a measure of inflation, isn't it?

    If a burger flipper in Idaho gets a twenty five cent per hour raise, the FED goes nuts worrying about inflation.

    But if the PE ratio goes from 7 or 8 to 25 or 30, that's a good thing?!

    This economic classist bias is truly destructive to our society.

    We have been measuring the health of the economy, not by how the economy is treating most Americans, but by how it treats that very small population percentage of Americans who are really in the investor class.

    And that classist economic outlook of ours has come back to bite all of us on the ass recently, hasn't it?

    Many of you object to the huge number of illegals in the nation, but few of you really understand why those basically innocent people are so bad for our economy

    Those ten or twenty million cheap workers are just another reason why American workers salaries haven't been keeping up with inflation. They are suppressing wages in the service sector.

    Simple economics, really. Excess workers depress average incomes.

    Between that problem, and our criminally stupid trade policies, we have been destroying the very foundation upon which our economy's wealth has always depended... the middle class workers who are GAINfully employed.

    When the working classes are well off, when they can pay their bills, and put something aside for the futures, too, America is well off.​

    When the working classes cannot pay their bills and save for their futures, too, America is getting poorer and has to look to foreign sources for investment money.​

    Supply side economic theory is as discredited as the flat earth theory.​

    Kensian economic theory, as practiced only to benefit the investor class, which is how it's been done for the last four decades, is ALSO deader than the dodo.​

    The problem is not government, the problem is TOXIC GOVERNMENT, folks.​
     
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  4. sparky
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    sparky VIP Member

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    that distinct wall st/main st mentality of investors gets mighty annoying after a while, but then most investors are thinking of their immediate future(s) ,as opposed to the long run

    if anything else, the bailout scenario should have painted them all in said light here.....

    what's really in store? well my $.02 this a.m. would be a more all inclusive article pointing out the speculative path we're about to travel on , based on the path we've been on....
     
  5. midcan5
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    midcan5 liberal / progressive

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    I'm never sure what to make of this stuff, intellectually it is somewhat simple, but psychologically it is truly a mess. I just checked a few companies we own and they were 10-13 p/e, looking around only Apple was 20. But who cares if the overall feelings of the 'people' is negative. We were out at a dinner party last evening and even people who can spend aren't. Bubbles are bad enough but this time the wonders of a free market are all too evident. Money is like a drug and has similar consequences.
     
    Last edited: Nov 9, 2008
  6. sparky
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    sparky VIP Member

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    well i wouldn't wait for any manner of governmental enlightenment midcan5, it's their job to mitigate, not create panic

    it should also be rather apparent to almost anyone by now that $$$ , and $$$ied interests not only run America, they've proliferated globally via collaborating factions such as the WTO, IMF & UN via usury...

    now the tin hat brigade my take this to lofty extents, but i prefer the simplicity , as well as undeniable relevance, of pointing out the job description of the worlds elites is....to stay elite....

    add into this economic juggernaut, the fact that we're a debt driven gdp, and it's not too hard to imagine why writers like Mr.Christopher Laird opines as he does....
     
  7. Neubarth
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    Neubarth At the Ballpark July 30th

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    I have cut your post apart, not to foment an argument, but to make a point that there is a topic that many of us do not understand, and that is the "Classist Bias" that has taken over in America.

    Most people would like to ignore it. They most certainly can not deny it. We need this topic as a separate one on the board.

    With CEO's of companies are making 7, 8, 9 and even over ten million dollars per year for their stewardship, (even when the company is losing money.), there is something seriously wrong with our concept of remuneration for services rendered. With Pro athletes making ten times more than the POTUS, our perspectives are all wrong. Have we come to the stage of "Bread and Circus" in the American Empire?

    Will the present economic crisis bring us back to Normalcy? (Harding coined that word when he ran for president many a year ago.)

     
  8. Paulie
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    Paulie Platinum Member

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    You're blaming bubbles on the "free" market?
     
  9. editec
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    editec Mr. Forgot-it-All

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    Free market?

    No.

    I don't blame bubbles on unicorns, either... since there are no unicorns just there is no, nor has there ever been, nor will ther ever be a mythical creature known as a "FREE market"

    I definitely DO blame bubbles on too few people having too much disposable income to invest, while far too many people have far too little money to spend or save, though.

    Now how do you suppose those conditions happened?

    A simple four word answer will suffice, I hope: supply side economic policies
     
    Last edited: Nov 9, 2008
  10. Paulie
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    Paulie Platinum Member

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    Yeah, it's got nothing to do with an ever-expanding monetary base, manipulated interest rates, cheap credit, fractional reserve lending, etc. :rolleyes:

    It's all the fault of supply side economics.

    Even you, who doesn't give the Fed a free pass, manages to forget the root causes.
     
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