re: Ominous sign for Wall St. to Juz50 Juz,We agree on how to...

  1. Chinguetti
    672 Posts.
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    14/09/02
    15:29
    Post #: 58912
    re: Ominous sign for Wall St. to Juz50 Juz,

    We agree on how to calculate the PE ratio. I am more puzzled by your assertion that falling interest rates are bad for stocks.

    If a stock was guaranteed to have an EPS of 0.10 forever, how much would you pay for the stock if the interest rate was 10%? How much would you pay if the interest rate was 5%?

    The correct answers are approximately $1 & $2, as interest rates fall the stock goes up - contrary to the assertion in your original post.
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