Everything is overpriced?

[PRE]

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Look harder, they're out there.

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I love all of your posts. Always so value-packed!

[meditate89]

on august 8, 1994, w. buffet purchased 257,640 shares of coca- cola's common stock for 21.95 a share .
Coca cola earned .84 per share in 1993, and .99 per share in 1994... meaning it was trading at a P/E of roughly 22 when he bought it. Did he make a bad investment because coke was "overpriced"? It may be worth paying a small premium for a premium company.

[Brainwalter]

COP 10x earnings
CVX 12x earnings
VLO 8.5x earnings
XOM 13x earnings

[Hellrazor]

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PS Goldman has a PE < 11.

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That entire sector is <11

MS 8.61
LEH 9.82
BSC 9.98
GS 10.27
MER 10.30

Even if you throw JPM and C into the mix its all under 13
(12.02 and 12.23 respectively)

[Uglyowl]

12 out of my 14 stocks have PE's < 20. If you that concerned about PE try:

Banks (Bank of America P/E 10)
Insurers (Mercury General P/E 14, MetLife P/E 8 (this will go up due to one time items)
Oil (Conoco Phillips P/E 9.4)
Fedex P/E 17.6

[jws43yale]

I always find the PE argument interesting b/c it is all based on what the market supports. I know the Nikkei had PE's around 50 and it was considered quite normal. Change from the historical mean doesn't necesarily mean things ar overvalued. Value is relative to investors desires to own these stocks. At the same time, I am not proposing the "dot com", this is a new economy idea.

Mainly, I am just asking why you think these historical PE averages are correct? Value is not intrinsic, it is a supply and demand issue, and there is always a chance companies have been undervalued in the past.

[Uglyowl]

I think the fury of merger activity suggests that there is still alot of "value" in this market.

[Brainwalter]

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I think the fury of merger activity suggests that there is still alot of "value" in this market.

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And the premiums on private equity buyouts look big to me but I'm new to the markets. When every time a company gets bought out it goes for 20% premium doesn't that imply the market is undervaluing these companies (or PE overvalues)?

[Kriber13]

[ QUOTE ]
on august 8, 1994, w. buffet purchased 257,640 shares of coca- cola's common stock for 21.95 a share .
Coca cola earned .84 per share in 1993, and .99 per share in 1994... meaning it was trading at a P/E of roughly 22 when he bought it. Did he make a bad investment because coke was "overpriced"? It may be worth paying a small premium for a premium company.

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He sure didn't but he bought one of the strongest global consumer monopolies, so just be careful what you buy at high multipliers.

[r3vbr]

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Value is not intrinsic

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Blasphemy