telstra-- the short of the century above $4.60...!, page-11

G’day Geffa

Agree with the point that after irrational highs irrational lows are likely to occur and in many stocks.
I would suggest that this is happening at present when you consider the current level of interest rates as compared to previous cases.

The difference I think however is that irrational highs are created predominately by greed. Irrational lows are created by gross stupidity.

One example: Gold at below $250 oz USD based on current cost of production and demand worldwide why would you dig a hole!
There maybe some mines the would still be profitable at that price but not enough to met demand. IMHO of course.

P/E in the range of 5 to 8 suggests earning before interest and tax of 20% to 14% of the share price.
Very hard to buy a micro business with that sort of return with interest rates at their current setting let alone a very large one the size of Telstra, Banks etc.

Mind if you know of one, give me a call.

If interest rates were in the range of 12% to 15% I wouldn’t argue against your comment but there not and not likely to be anytime soon.
So P/E’s of 5 to 8 on anything other than pint sized companies appears idiotic to me.

Time will tell but it still looks cheap to me.

Regards