The Stingy News Weekly (10/13/02)
The Markets This Week
DOW 30: 7,850 +4.28% with a median P/E of 21.2
S&P/TSX: 5,979 +0.74% with a median P/E of 21.7
The Value View
Dow at a P/E of 20: 7,406 (-5.7%) Poor Value
Dow at a P/E of 15: 5,554 (-29.3%) Fair Value
Dow at a P/E of 10: 3,703 (-52.8%) Good Value
S&P/TSX at a P/E of 20: 5,511 (-7.8%) Poor Value
S&P/TSX at a P/E of 15: 4,133 (-30.9%) Fair Value
S&P/TSX at a P/E of 10: 2,755 (-53.9%) Good Value
Math prof tests investing formulas
"Retired University of Waterloo professor Peter Ponzo, who has found statistics have limits when trying to predict the future."
Of debt, deflation and denial
"The risk of falling prices is greater than at any time since the 1930s."
"Hey Microsoft, Cisco, Oracle and Dell! Give us some money! None of these technology giants offers investors a dividend. But all of them, despite massive drops in their stock prices, are still stable market leaders with healthy balance sheets. As a result, some money managers think it's time for them to suck it up and start doling out some of their earnings to shareholders."
Nobel prize in economics
"for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty"
Will war bring prosperity?
"What is war but Frederic Bastiat's broken-window fallacy writ large? Wars--and what is war except crime on a mass scale?--destroy rather than produce. The vandal that destroys a window causes not only the owner to bear the costs of replacing it, but costs those whom he planned on using that money to buy from. The same goes for wars. The warlords--of war and peace--destroyed so much, not only what existed, but all those new things that could have existed, if only individuals were left in peace."
Foul play among the UAL shorts?
"According to the NYSE regulations, a person short-selling shares has to "deliver" the shares to the buyer three days after the trade date. Extensions are usually allowed by the clearinghouses. But investors who are long on UAL say in this case, the many of the shorts haven't been able to deliver."
"The so-called slackers are complaining (again) about the economy. This time they have reason to whine."
Mergers: why most big deals don't pay off
"A BusinessWeek analysis shows that 61% of buyers destroyed shareholder wealth."
Revenue up 2.2%! Hype up 500%!
"It's bad enough that Dell and hundreds of other companies spend as much time promoting their stock as they do running their business. What's worse is that investors still fall for it."
This week's trivia questions are:
Q1. When was American Express founded?
Q2. When was Phillip Morris founded?
Q3. When was Ford founded?
The answers to last week's trivia questions are:
Q1. What was the P/E ratio of the S&P500 during the lows of 1932?
Q2. What was the P/E ratio of the S&P500 during the lows of 1974?
Q3. What was the P/E ratio of the S&P500 during the lows of 1982?
Source: Robert Shiller's Monthly Data
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