The P/ E of sno500 is 18 based on last 12 month earning. Is 15 based on next 12 mo earnings.So E next 12/ E last 12 = 18/15= 1.2. Or 20% higher.
How that be? Earnings typically increase 6%.
Unless 20 is the new 6
Typed from memory today wsj
Re: Fuzzy Math Part II. 6 = 20
So how is this possible. Buybacks. And also deliberate misinformation. Cause last year buybacks decrease sghare count by 3%. Not enough to account for this huge gap between bat and pad.
But that's speculation on my part. Leave that aside.
In 2009 companies spent 85% less on buybacks than in 2013. While sno500 bottomed at 675 in 2009. And reached peak of abt 1860 in 2013.
So companies are jut like ordinary "investors". They hoard cash when they should buy. And buy when they should sell.
Re: Fuzzy Math Part II. 6 = 20
And what do u hear from "pundits" on TVand media? They love buybacks. Buybacks are praised and given as reason to buy a company's stocks.
Investors would be better served tuning out such pundits. Much as they tune out this column.
Did we say the scars run deep? We thought so.
Re: Fuzzy Math Part II. 6 = 20
The P/ E of sno500 is 18 based on last 12 month earning. Is 15 based on next 12 mo earnings.So E next 12/ E last 12 = 18/15= 1.2. Or 20% higher.
How that be? Earnings typically increase 6%.
Unless 20 is the new 6
Typed from memory today wsj
may be they are speculating 20% price drop :D
Re: Fuzzy Math Part II. 6 = 20
Good one. So where is chaay paani?
Re: Fuzzy Math Part II. 6 = 20
southie and captain sitting on a thread... F U Z Z Y M A T H I N G
Re: Fuzzy Math Part II. 6 = 20
Dil Khush Kaptaan sahab.
Re: Fuzzy Math Part II. 6 = 20
Our Alamelu humbly pointed out that the P in the numerator is constant. It is current price. So only E is different. Last 12 months. And next 12 months.
So while our esteemed guest had a very interesting solution to this problem, it didn't pass the Alamelu screen that our firm uses as SOP.