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« Some Trading Ideas | Main | January 20th Blogger Sentiment Poll »

Comments

You are currently projecting a P/E ratio of 7 for the Russell-2000.
There must be a mistake since recently the number was 27.
This would imply earnings to be 3x peak earnings from last year.

Will,
I'm not sure what you are reading but this post relates to the S&P 500. Based on the $75 EPS estimate for 2009 the projected P/E is about 11.3 which is reasonable considering the trailing P/E is 15.64.

The S&P is OK but not the Russell-2000.
Don't you calculate P/Es for the indeces shown by the WSJ(see link below)?

It uses Birinyi Associates as source.

http://online.wsj.com/mdc/public/page/2_3021-peyield.html?mod=mdc_h_usshl

The S&P is OK but not the Russell-2000.
Don't you calculate P/Es for the indeces shown by the WSJ(see link below)?

It uses Birinyi Associates as source.

http://online.wsj.com/mdc/public/page/2_3021-peyield.html?mod=mdc_h_usshl

Will,
I see what you are looking at; it's possible that the P/Es you are using do not include any negative earnings. Often they are simply not included for an index's EPS; but we believe that they should be. Also earnings are on an "as reported basis" which means write-downs and other items are included. Thus the trailing P/E can sometimes be much different than the forward P/E.

Last year the peak EPS for the Rut-2000 was around $20+(this is your calculation which correctly includes neagtive EPS).
You are now showing an ESTIMATED P/E of 7 which implies an EPS of $60+ This is too large(3x) a recover in EPS.

Cleve,
I noticed today that the P/E for the Russell-2000 jumped from $7 to $16.
What did you do differently?

Will,
I'm not sure where the mix up was, I don't report that number to the WSJ but I have double checked and the current P/E for the Russell 2000 matches what we have. We have not changed our calculation.

Thank you.

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