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Oppenheimer Holdings Inc. Message Board

  • superbmetamorphosis superbmetamorphosis Jan 24, 2014 9:05 PM Flag


    This article was published on March 21st, 1994!!! Yes, almost 20 years ago!!! I selected the most relevant points....

    (FORTUNE Magazine) – IS IT TIME to turn away from stocks? No, not yet, though your nervousness is understandable. Τhe Dow Jones industrial average seems dangerously high. After 40 months without a 5% to 10% correction, vs. an average bullish run of 27 months, the market is indeed long in the tooth. But the power of investor cash and strong earnings cannot be ignored. Despite this rising market's advanced age, its total return to investors is still subpar. More money can be made. The road to riches requires looking at the parts of the stock market that are not aging and worn out but merely primed to take off as the economy's engines roar on. Rising interest rates means a new chapter for the market. For years declining rates boosted stocks, making them more attractive than fixed-income investments. But the Federal Reserve reversed gears. Investors initially took the news badly..But those who sold may have acted too hastily.....will lower the attractiveness of stocks, represented by the P/E multiple on the market. Stocks in Standard & Poor's 500-stock index recently traded at 23 times trailing earnings. The average historical P/E multiple for stocks is 14. If earnings don't come through fast enough, prices will have to fall to make stocks look more reasonable. But while rising interest rates may eventually slay the bull, that's unlikely to happen soon. One reason is that near-term advances in earnings could pull down those lofty P/Es. When compared with expected earnings the market looks more reasonable, trading at a P/E multiple of 15. Companies have been reporting strong gains through cost cutting and modest price increases in sectors like autos. An economic turnaround in Europe would spell more good news...

23.20-0.30(-1.28%)Dec 24 2:48 PMEST

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