Let's pick one high flying stock just to get our lines reasoning clear and then see what we can say about the whole market.
How about Yahoo.com? Even though they've lost 20% of their value over the last 2 days, they're still at 410 right now. How much would they have to pay in dividends to make your ownership of their stock profitable over, say, a 40 year period?
Well, actually, I don't know how to figure all this stuff out with all the interest rates, and inflation and so on
...maybe Doug could help us out.
They've got about 264 million shares and a total market cap of $108 billion. Current earnings per share are .25 It seems like they'd have to pay out a dividend of $10 per share just to return the value you sunk into their stock. Do investors really think that Yahoo is going to make any where near $26 billion a year on click through advertising? I think investors just think that some other investor will buy their stock from them for a higher price, they don't really think Yahoo will ever bring in that kind of money. If that's the case, then couldn't you say, at a P/E of 1772.00, that it is overvalued?
Since I've written this message Yahoo has gained 10 points to 420. Yahoo!
-Zack
>-----Original Message-----
>From: owner-lbo-talk at lists.panix.com
[mailto:owner-lbo-talk at lists.panix.com]On Behalf Of Jordan Hayes
>Sent: Tuesday, January 04, 2000 10:14 PM
>To: lbo-talk at lists.panix.com
>Subject: RE: thegreatcrash.com press release
>> is it at least true that this market is
>> one of the biggest bubbles in history?
>The beauty is that we won't know until/unless it bursts :-)
>Does a graph of the worldwide population signal a bubble to you?
>> Even if we can't say that a crash is definitely coming, at least we could
> >say, "This is the most overvalued market since tulips by many measures."
>You'd have to define "proper valuation" first. Go on: I dare you.
>How much *should* this market be valued at? And what makes your
>measure right?
>> And that would be fun.
>Sure, fun. But true?
>/jordan