Post #53,899
9/30/02 1:23:29 AM
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historic p/e ratio chart
Here is a price/earnings ratio chart like the one I mentioned before:
[link|http://www.economist.com/displaystory.cfm?story_id=1336202|
[link|http://www.economist.com/displaystory.cfm?story_id=1336202|http://www.economis...y_id=1336202]]
(Hmmmm. They use ColdFusion. I wonder if there are any jobs there. Not that I dig CF, but these corp layoff days I'll even program heavy OO If somebody pays me to.)
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Post #53,953
9/30/02 11:57:30 AM
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Fascinating
-drl
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Post #54,174
10/1/02 5:06:59 AM
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Thank you
As I have said before, the stock market is still overvalued by about a quarter on fundamentals. Long-term that isn't going to matter much, but it is enough that I would prefer to wait for it to either stop falling so crazily or else get to where I think it should be.
And on the same site the [link|http://www.economist.com/printedition/displayStory.cfm?Story_ID=1353032|following] struck me as highly amusing. (What? You mean gossip rags haven't hit rock bottom already?)
Cheers,
Ben
"Career politicians are inherently untrustworthy; if it spends its life buzzing around the outhouse, it\ufffds probably a fly."
- [link|http://www.nationalinterest.org/issues/58/Mead.html|Walter Mead]
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Post #54,374
10/1/02 8:53:39 PM
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So much for Horatio Alger -
Success is about commercial muscle coupled with shamelessness.
..what to groom one's offspring for next? Teach photogenic insouciance or virtue and unemployability? (Orwell was an optimist)
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Post #55,159
10/6/02 3:47:00 PM
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P/E versus dividends
According to this article
[link|http://www.washingtonpost.com/wp-dyn/articles/A46491-2002Oct5.html|
[link|http://www.washingtonpost.com/wp-dyn/articles/A46491-2002Oct5.html|http://www.washingt...002Oct5.html]]
there is a debate going on about whether one should *only* look at dividends. Looking at dividends to determine stock value would make things simpler. However, because dividends are taxed heavily, companies often feel that it is better to put the money back into the company instead, according to the article, increasing the stock value by growing the company.
But even if a company grows forever and ever, it may never pay anything out in dividends (or wimpy dividends). The value of your stock holdings is then in being able to sell it to others later, and not the dividends.
This seems almost like a Ponsi scheme to me. Dividends are more "real". You can then evalute things based on its direct return, like buying bonds or rental houses, etc.
Also, good small companies rarely make good big companies. Therefore, their ability to grow when they are small may not last forever (poor correlation).
It hurts the head to think about. Stocks are so volitile because nobody knows the real value of the damned things. Perhaps the gov should not tax dividends so heavily so that we will rely more on dividends than growth, giving us something less abstract to value stocks on.
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Post #55,161
10/6/02 4:00:07 PM
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Stock buybacks are as good as dividends
The question isn't really whether you get dividends. It is whether profits in a company ever come back to investors.
Stock buybacks are merely another way to do that, and one which has better tax consequences.
As for stocks, there are arguments every way for how they should be now. Long-term they are extremely likely to be a solid investment. Make your own decisions, and as long as you are not ridiculous about it, it will probably work out OK in the end.
Cheers,
Ben
"Career politicians are inherently untrustworthy; if it spends its life buzzing around the outhouse, it\ufffds probably a fly."
- [link|http://www.nationalinterest.org/issues/58/Mead.html|Walter Mead]
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Post #55,198
10/6/02 7:35:48 PM
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So is MS's behavior (stocking $$) good or bad for investors?
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Post #55,201
10/6/02 8:15:14 PM
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Mixed
It allows value to accumulate without taking tax consequences. Unless it is ruled illegal, in which case everyone except Uncle Sam loses. So it has been good for major Microsoft investors (particularly Bill Gates), but is legally risky.
But it is fair to point out that Microsoft is in a form of business where they need to make large and risky long-term investments. This limits them to lines of business with very high returns, and gives them a legitimate reason to have large reserves. (If not as absurdly large as the ones that they currently have...)
Cheers,
Ben
"Career politicians are inherently untrustworthy; if it spends its life buzzing around the outhouse, it\ufffds probably a fly."
- [link|http://www.nationalinterest.org/issues/58/Mead.html|Walter Mead]
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Post #55,363
10/7/02 7:56:42 PM
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informed investors
Long-term they are extremely likely to be a solid investment.
My main argument for dividends is that they make it easier for stocks to be a decent medium-term investment, not just long-term, because it is clearer what you are getting (based on history). You can rely less on income statements, which are too subject to Enron-like manipulation. Thus, less volitility.
If they were just taxed less. I suppose congress did it this way to encourage direct reinvestment.
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