Re: [CANSLIM] Cheap?

From: "Winston Little" <wlittle1@peoplepc.com>
Subject: Re: [CANSLIM] Cheap?
Date: Tue, 16 Jul 2002 13:10:00 -0400
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Zillagirl:

In 1965 approximately 10% of the US population invested in stocks. At that
time, just over 50% of all TRADING was done by individuals.
In April 2002 approx. 60% had stock ownership. However, more than 80% of the
TRADING is through institutions. Thus, one would conclude that the bulk of
the increased ownership is exercised through mutual and pension and 401(k)
funds.
   There are currently about 17,000 publicly traded companies today (no idea
what the number was in 1965). Most of these issues are low priced issues,
since, as once one goes beyond the first 700 or so issues, the share price
is well below $5/share.
I like to try to reduce things to a simple view. To me then, PER is a
measure which to me expresses the relation between GREED or FEAR at any
particular time. As greed rises, so too the PER rises as demand for a given
issue increases. As PER falls, then fear begins to overwhelming greed.

Thus I believe you are on the right track for PER ratios in your postulate.
There will be some divergence from the past.
However, my belief is that the divergence from the old "traditional values"
may not be enormous when mass FEAR and despair sets in and the crowd
overreacts.


- ----- Original Message -----
From: "zillagirl" <zillagirl@email.msn.com>
To: <canslim@lists.xmission.com>
Sent: Tuesday, July 16, 2002 12:35 PM
Subject: Re: [CANSLIM] Cheap?


> first I don't think that is the same argument- second -I need something a
> little more concrete to reform my thoughts on, if in fact they are wrong.
> Thanks though
> ----- Original Message -----
> From: "J. Lobatto" <jlobatto@nyc.rr.com>
> To: <canslim@lists.xmission.com>
> Sent: Tuesday, July 16, 2002 9:14 AM
> Subject: Re: [CANSLIM] Cheap?
>
>
> > I suspect some Dutchmen made the same argument several hundred years ago
> at
> > the height of the tulip craze.... "only 40% of the population owns
tulips,
> > when 85% wants to. Back in the dark ages, only 10% of our fellow
Dutchmen
> > owned tulips. Clearly 40 if not 85% will be the norm from now on, so
> prices
> > have to stay high....." I know, you'll argue that tulips had no real
> value,
> > but did anyone else read today that Dr. Koop. com which was worth
> > $1,000,000,000 at the height of the dot.mania was just sold to Vitacost
at
> > about $150,000(?). Ouch! I doubt even tulip prices fell that hard.
> >
> > Jon
> > ----- Original Message -----
> > From: "zillagirl" <zillagirl@email.msn.com>
> > To: <canslim@lists.xmission.com>
> > Sent: Tuesday, July 16, 2002 11:57 AM
> > Subject: Re: [CANSLIM] Cheap?
> >
> >
> > > I have a question for minds that are smarter then my own.  When we
look
> at
> > > price to earnings, don't we have to consider the number of people
> > investing
> > > in the market today over what it was in the past.  I've read
> > > historically -that in the past- 10 to 15% of households were involved
in
> > the
> > > stock market.  Now I've seen figures of 50% or more.     If 35% more
> > > American households started putting money in the same 10,000 or so
> stocks
> > > that existed before-it seems like that would drive up the price, even
if
> > the
> > > business was no more profitable or productive then before.(supply and
> > > demand). Possible even keeping the price up if these households kept
> > > investing(higher P/E ratios)      Hence maybe it would be unrealistic
to
> > > think that the correct P/E for this point in time should be exactly in
> > line
> > > with the correct P/Es of the past.  Unless of course that extra 35% of
> the
> > > people got out of the market again.       Kind of like saying-the
> > > babyboomers are here and our mind tells us that we need many more
> > retirement
> > > homes- but historically, over the past 75 years, 2 retirement homes
per
> > city
> > > have been the norm so that is the figure we will stick with.   If this
> > > theory sounds reasonable-it would certainly take some of the fright
out
> of
> > > those charts.
> > > ----- Original Message -----
> > > From: "Hill, Ernie" <Ernie.Hill@ElPaso.com>
> > > To: <canslim@lists.xmission.com>
> > > Sent: Tuesday, July 16, 2002 5:30 AM
> > > Subject: RE: [CANSLIM] Cheap?
> > >
> > >
> > > > Here is an interesting perspective on PE ratios the S&P and what is
or
> > is
> > > > not cheap.
> > > >
> > > > http://www.decisionpoint.com/ChartSpotliteFiles/020712sppe.html
> > > >
> > > > E
> > > >
> > > >  -----Original Message-----
> > > > From: inderjit [mailto:inderjit@adelphia.net]
> > > > Sent: Monday, July 15, 2002 10:36 PM
> > > > To: canslim@lists.xmission.com
> > > > Subject: RE: [CANSLIM] Cheap?
> > > >
> > > > You can easily ;-) find out what a stock is worth by visiting
> > > > http://www.valuepro.net/index.shtml. AOL is worth zero, NVR 1800+
etc.
> > > >
> > > > Regards and have a profitable Tuesday.
> > > >
> > > >
> > > >
> > > > -----Original Message-----
> > > > From: owner-canslim@lists.xmission.com
> > > > [mailto:owner-canslim@lists.xmission.com] On Behalf Of zillagirl
> > > > Sent: Monday, July 15, 2002 7:51 PM
> > > > To: canslim@lists.xmission.com
> > > > Subject: Re: [CANSLIM] Cheap?
> > > >
> > > >
> > > > I emailed Mr. Tom Petruno at the L.A.Times today and asked him if he
> > > > could clarify the differences in he's figure and the figure on the 2
> web
> > > > sits discussed-will let you know what I find out.
> > > > ----- Original Message -----
> > > > From: "Fred Richards" <adrich@gte.net>
> > > > To: <canslim@lists.xmission.com>
> > > > Sent: Monday, July 15, 2002 3:42 PM
> > > > Subject: RE: [CANSLIM] Cheap?
> > > >
> > > >
> > > > > the latest www.decisionpoint.com report on the PE ratio for the
S&P
> > > > > 500
> > > > for
> > > > > the week ending 6/12/02 stood at a still whopping 39.60 times!
> > > > >
> > > > > -----Original Message-----
> > > > > From: owner-canslim@lists.xmission.com
> > > > > [mailto:owner-canslim@lists.xmission.com]On Behalf Of Fred
Richards
> > > > > Sent: Sunday, July 14, 2002 7:55 PM
> > > > > To: canslim@lists.xmission.com
> > > > > Subject: RE: [CANSLIM] Cheap?
> > > > >
> > > > >
> > > > > As an neophyte investor,  what you are missing is an doubting
mind.
> > > > >
> > > > > It is the credibility of the estimates that the author is using.
> > > > >
> > > > > Does the article state what firm and/or analyst made the estimates
> and
> > > >
> > > > > on what basis they were made and/or the time frame?
> > > > >
> > > > > Based upon the most reliable information I have using information
> > > > > prior to the revamping of the list effective July 19, I believe,
the
> > > > > S&P 500 is
> > > > still
> > > > > selling way over 19 times forward 12 month earnings.
> > > > >
> > > > >
> > > > >
> > > > > -----Original Message-----
> > > > > From: owner-canslim@lists.xmission.com
> > > > > [mailto:owner-canslim@lists.xmission.com]On Behalf Of zillagirl
> > > > > Sent: Sunday, July 14, 2002 7:25 PM
> > > > > To: canslim@lists.xmission.com
> > > > > Subject: Re: [CANSLIM] Cheap?
> > > > >
> > > > >
> > > > > There is quite an extensive article in the L.A. Times today about
> the
> > > > > markets.  In there it states that " the average stock in the S & P
> 500
> > > >
> > > > > is priced at about 19 times this years expected earnings per
share,
> by
> > > >
> > > > > many wall street estimates.  That is far above the historical
> average
> > > > > price -to -earnings ratio of about 14." I think I like these
numbers
> a
> > > >
> > > > > little better.  What's up-am I missing something here?
> > > > > ----- Original Message -----
> > > > > From: "Tom Worley" <stkguru@bellsouth.net>
> > > > > To: <canslim@lists.xmission.com>
> > > > > Sent: Saturday, July 13, 2002 7:06 PM
> > > > > Subject: Re: [CANSLIM] Cheap?
> > > > >
> > > > >
> > > > > > I make no investment decisions, or even select stocks for
> watching,
> > > > > > on
> > > > the
> > > > > > basis of their history. The market, and stock prices, moves on
> > > > > expectations.
> > > > > > Those expectations are based on projected earnings, not what
they
> > > > > > did
> > > > last
> > > > > > year, or five years ago.
> > > > > >
> > > > > > ----- Original Message -----
> > > > > > From: "Rocky Sanghvi" <rs@mylodestar.com>
> > > > > > To: <canslim@lists.xmission.com>
> > > > > > Sent: Saturday, July 13, 2002 9:41 PM
> > > > > > Subject: RE: [CANSLIM] Cheap?
> > > > > >
> > > > > >
> > > > > > Lois,
> > > > > >
> > > > > > This was one of the news items on the nasdaq.com website
> frontpage.
> > > >
> > > > > > If
> > > > > you
> > > > > > wish to see it you need to go to nasdaq.com and scan some of the
> > > > > > older
> > > > > news
> > > > > > items.
> > > > > > This was was from the Dow Jones News Wire.
> > > > > >
> > > > > > Best Wishes
> > > > > > Rocky
> > > > > >
> > > > > > PS Tom - I am not sure why we shouldnt look at trailing earnings
> as
> > > > > > a
> > > > part
> > > > > > of your overall investment outlook.  Yes maybe not CANSLIM
(which
> > > > > > only
> > > > > looks
> > > > > > at future earnings) but if we are looking at charts and history
we
> > > > > > may
> > > > as
> > > > > > well consider historical facts such as what the news item was
> > > > > > referring
> > > > > to.
> > > > > >
> > > > > > -----Original Message-----
> > > > > > From: owner-canslim@lists.xmission.com
> > > > > > [mailto:owner-canslim@lists.xmission.com]On Behalf Of Lois
> > > > > > Sent: Saturday, July 13, 2002 9:54 AM
> > > > > > To: canslim@lists.xmission.com
> > > > > > Subject: Re: [CANSLIM] Cheap?
> > > > > >
> > > > > >
> > > > > > Rocky,
> > > > > >
> > > > > > Would you be so kind as to post a link for the info below?
> > > > > >
> > > > > > TIA,
> > > > > > Lois
> > > > > >
> > > > > > Rocky Sanghvi wrote:
> > > > > > >
> > > > > > > S&P 500 Price/Earnings Ratio At 37.31, Down From 37.65
> > > > > > >
> > > > > > > NEW YORK -(Dow Jones)- The price/earnings ratio of the
Standard
> &
> > > > Poor's
> > > > > > 500
> > > > > > > index at the close of trading Friday, July 12, was 37.31.
> > > > > > > Thursday, the ratio was 37.65.
> > > > > > >
> > > > > > > The lowest price/earnings ratio on the S&P 500 came in the
> second
> > > > > quarter
> > > > > > of
> > > > > > > 1949, when the reading slipped to 5.9. Over the last decade,
the
> > > > > > > low
> > > > was
> > > > > > > 15.77 in the first quarter of 1995.
> > > > > > >
> > > > > > > The price/earnings ratio, known as the multiple, is a measure
of
> > > > > > > the
> > > > > > average
> > > > > > > stock price divided by the average earnings per share. The
> > > > > > > earnings
> > > > data
> > > > > > is
> > > > > > > based on the trailing four quarters.
> > > > > > >
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