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#1
07-12-2007, 06:18 PM
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Everything is overpriced?
Currently every stock I research is trading at 20+ p/e multiples and trading at their 52week highs. Isnt there some overoptimism in the market? I wonder how some major catalyst can hurt current prices.
Where are the value plays today? Graham and dodd people please advise 
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#3
07-12-2007, 06:33 PM
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Re: Everything is overpriced?
[ QUOTE ]
Currently every stock I research is trading at 20+ p/e multiples and trading at their 52week highs. Isnt there some overoptimism in the market? I wonder how some major catalyst can hurt current prices. Where are the value plays today? Graham and dodd people please advise [/ QUOTE ] Is a 20 pe really so outrageous? The market pe looks to be around 17, barely above the 50 year historical median. http://bigpicture.typepad.com/commen...sp_500_50.html
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#5
07-12-2007, 07:09 PM
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Re: Everything is overpriced?
[ QUOTE ]
[ QUOTE ] Currently every stock I research is trading at 20+ p/e multiples and trading at their 52week highs. Isnt there some overoptimism in the market? I wonder how some major catalyst can hurt current prices. Where are the value plays today? Graham and dodd people please advise [/ QUOTE ] Is a 20 pe really so outrageous? The market pe looks to be around 17, barely above the 50 year historical median. http://bigpicture.typepad.com/commen...sp_500_50.html [/ QUOTE ] Meh, you're not normalizing earnings. Of course mulitples are only a little over average right now if you are only using 6-month trailing earnings. We're currently in the midst of one of the longest earning stretches in history. Normalize earnings over the past 10 years, though, and compare them to the historical average of trailing 10-year multiples and you'll get a PE of around 25. Basically, other than the 1999-2000 period, the market has never been this overrated.
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#6
07-12-2007, 07:38 PM
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Re: Everything is overpriced?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] Currently every stock I research is trading at 20+ p/e multiples and trading at their 52week highs. Isnt there some overoptimism in the market? I wonder how some major catalyst can hurt current prices. Where are the value plays today? Graham and dodd people please advise [/ QUOTE ] Is a 20 pe really so outrageous? The market pe looks to be around 17, barely above the 50 year historical median. http://bigpicture.typepad.com/commen...sp_500_50.html [/ QUOTE ] Meh, you're not normalizing earnings. Of course mulitples are only a little over average right now if you are only using 6-month trailing earnings. We're currently in the midst of one of the longest earning stretches in history. Normalize earnings over the past 10 years, though, and compare them to the historical average of trailing 10-year multiples and you'll get a PE of around 25. Basically, other than the 1999-2000 period, the market has never been this overrated. [/ QUOTE ] It's a shortsighted analysis either way. When someone says "OMG pe's are high PANIC" I don't think that warrants a really in depth response because I don't put a lot of stock into the original statement.
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#8
07-12-2007, 08:15 PM
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Re: Everything is overpriced?
[ QUOTE ]
[ QUOTE ] Currently every stock I research is trading at 20+ p/e multiples and trading at their 52week highs. Isnt there some overoptimism in the market? I wonder how some major catalyst can hurt current prices. Where are the value plays today? Graham and dodd people please advise [/ QUOTE ] Is a 20 pe really so outrageous? The market pe looks to be around 17, barely above the 50 year historical median. http://bigpicture.typepad.com/commen...sp_500_50.html [/ QUOTE ] Inflation is somewhat lower than it's been in the past 40 years, on average. Given normal circumstances, the market PE should be lower than the median.
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#9
07-12-2007, 08:27 PM
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Re: Everything is overpriced?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] Currently every stock I research is trading at 20+ p/e multiples and trading at their 52week highs. Isnt there some overoptimism in the market? I wonder how some major catalyst can hurt current prices. Where are the value plays today? Graham and dodd people please advise [/ QUOTE ] Is a 20 pe really so outrageous? The market pe looks to be around 17, barely above the 50 year historical median. http://bigpicture.typepad.com/commen...sp_500_50.html [/ QUOTE ] Inflation is somewhat lower than it's been in the past 40 years, on average. Given normal circumstances, the market PE should be lower than the median. [/ QUOTE ] Growth is cheaper than it was 40 years ago, pe should be higher. We could go back and forth with this all day I bet.
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#10
07-12-2007, 10:01 PM
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Re: Everything is overpriced?
FCX was a value play after it bought Phelps Dodge. If you're only looking at P/E, which is pretty narrow, it could still be attractive. Although it's up 70% YTD, it's P/E is still less than 13. You're seeing a big run in the mining stocks because of consolidation and higher spot metal prices.
You should look more closely or run a screener with low PE multiples if that's the crux of your analysis. PS Goldman has a PE < 11.
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