>Brad De Long wrote:
>
>> NASDAQ has closed over 5000... The trailing p/e of the NASDAQ index
>> is 388.83... According to the Bloomberg Description Page, the market
>> capitalization of the NASDAQ is $6.42 trillion...
>
>And that 389 is the ratio to *reported* earnings. I'd like to know
>what's the ratio to anything resembling real profit.
If anyone cares to look it up, there's a lengthy front page New York Times story back on January 7th titled "Accounting Firm Is Said to Violate Rules Routinely" by Floyd Norris.
The first few paragraphs read:
Most partners of Pricewaterhouse-Coopers, the world's largest accounting firm, violated rules requiring that they not have investments in companies audited by their firm, the Securities and Exchange Commission said yesterday. The firm said five partners had been dismissed as a result of the investigation.
The report, compiled by a law firm that studied the accounting firm after previous problems led to S.E.C. action in a few cases, documented a system in which violations were routine, many partners said they were unfamiliar with details of the long-standing rules and little effort was made by the firm to enforce them.
The S.E.C. said that 31 of the 43 partners in the firm's top leadership had committed at least one violation, as had six of the 11 partners responsible for enforcing the rules requiring that senior employees of accounting firms have no stake in the companies whose financial reports the firm is certifying as independent auditors. Altogether, the investigation found 8,064 violations by partners and employees of the firm.
"This report is a sobering reminder that accounting professionals need to renew their commitment to the fundamental principle of auditor independence," said Lynn E. Turner, the chief accountant of the S.E.C. and a former partner of Coopers & Lybrand, one of the firms that merged in 1998 to form Pricewaterhouse-Coopers. He said a new study would review the performance of the other major accounting firms, adding that "I am concerned about whether the new study will find any differences between the firms." ...
At the S.E.C.'s request, the Public Oversight Board, an agency created by Congress to keep watch on auditors, will review the other major accounting firms to see if they have also violated the rules -- the review is a direct result of the PricewaterhouseCooper's report. "This is a very serious problem," said Charles A. Bowsher, the chairman of the board and a former comptroller general of the United States. "I think everybody in the profession will be surprised by the magnitude of this problem."
etc. ---------------------