|There has been significant recent discussion about
valuing stocks in the high-tech New Economy. How
can a company like Amazon.com, with no actual earnings
according to its financial statements and continuing
paper losses, be valued at tens of billions of dollars?
Or how can the whole stock market be trading at
a P/E of 40, when traditionally over the last fifty
years market P/E has been between 10 and 15? Consider
Exuberance by Robert J. Shiller:
An unprecedented increase just before the start
of the new millennium has brought the market
to this great height. The Dow Jones Industrial
Average (from here on, the Dow for short) stood
at around 3,600 in early 1994. By 1999, it had
passed 11,000, more than tripling in five years,
a total increase in stock market prices of over
200%. At the start of 2000, the Dow passed 11,700.
However, over the same period, basic economic
indicators did not come close to tripling. U.S.
personal income and gross domestic product rose
less than 30%, and almost half of this increase
was due to inflation. Corporate profits rose
less than 60%, and that from a temporary recession-depressed
base. Viewed in the light of these figures,
the stock price increase appears unwarranted
and, certainly by historical standards, unlikely
and the New Economy by
Matthew R. Crow (Mercer Capital): Some
companies just aren't ready for the Capital
Asset Pricing Model. Most securities analysts
are trained like short order cooks to examine
a company's earnings stream, apply a multiple,
get an answer, and get on to the next one. Value
equals earnings times a P/E ratio. Certain ranges
of earnings multiples and cash flow multiples
are taught as being almost universal. Just like
everyone likes bacon and eggs, everyone thinks
six to eight times EBITDA is reasonable.
Stocks' Price Is Finally Right by Michael
Edesess: But isn't it possible that
historic market levels were too low? In the
past, the information investors needed to assess
the value of an investment was far less readily
available than it is today. Investments may,
as a result, have seemed more risky than they
really were. Investors may have been too cautious
to anticipate the high corporate earnings growth
rates that subsequently came to pass.
'TIME-TRAVELER' BUSTED FOR INSIDER TRADING Wednesday
March 19, 2003 By CHAD KULTGEN
NEW YORK -- Federal investigators have arrested
an enigmatic Wall Street wiz on insider-trading
charges -- and incredibly, he claims to be a time-traveler
from the year 2256!
Sources at the Security and Exchange Commission
confirm that 44-year-old Andrew Carlssin offered
the bizarre explanation for his uncanny success
in the stock market after being led off in handcuffs
on January 28.
"We don't believe this guy's story -- he's
either a lunatic or a pathological liar,"
says an SEC insider.
"But the fact is, with an initial investment
of only $800, in two weeks' time he had a portfolio
valued at over $350 million. Every trade he made
capitalized on unexpected business developments,
which simply can't be pure luck.
"The only way he could pull it off is with
illegal inside information. He's going to sit
in a jail cell on Rikers Island until he agrees
to give up his sources."
The past year of nose-diving stock prices has
left most investors crying in their beer. So when
Carlssin made a flurry of 126 high-risk trades
and came out the winner every time, it raised
the eyebrows of Wall Street watchdogs.
"If a company's stock rose due to a merger
or technological breakthrough that was supposed
to be secret, Mr. Carlssin somehow knew about
it in advance," says the SEC source close
to the hush-hush, ongoing investigation.
When investigators hauled Carlssin in for questioning,
they got more than they bargained for: A mind-boggling
Carlssin declared that he had traveled back in
time from over 200 years in the future, when it
is common knowledge that our era experienced one
of the worst stock plunges in history. Yet anyone
armed with knowledge of the handful of stocks
destined to go through the roof could make a fortune.
"It was just too tempting to resist,"
Carlssin allegedly said in his videotaped confession.
"I had planned to make it look natural, you
know, lose a little here and there so it doesn't
look too perfect. But I just got caught in the
In a bid for leniency, Carlssin has reportedly
offered to divulge "historical facts"
such as the whereabouts of Osama Bin Laden and
a cure for AIDS.
All he wants is to be allowed to return to the
future in his "time craft."
However, he refuses to reveal the location of
the machine or discuss how it works, supposedly
out of fear the technology could "fall into
the wrong hands."
Officials are quite confident the "time-traveler's"
claims are bogus. Yet the SEC source admits, "No
one can find any record of any Andrew Carlssin
existing anywhere before December 2002."
Weekly World News will continue to follow this
story as it unfolds. Keep watching for further