[jdm]

"(most of the market is at least slightly overvalued if you're big into P/E) but not that outrageous."

"Slightly" overvalued? If that's the case, a once allegedly 'strong buy' stock such as JDS Uniphase wouldn't have nosedived from $130 a share down to less than $10 a share; Corning was another fiber optic behemoth that took an unbelievable hit. Storage (EMC, Network Appliance) along with Nortel, Cisco, etc. shared similar fate. Early 2000 taught us that P/E does matter. And matters big.

[discostu]

AT LEAST slightly overvalued, which leaves the door open for companies that are grotesquely overvalued.

P/E matters if you're a buy and hold guy, most of the folks on the market these days are roulette players, for them P/E means nothing, which is why the market is so volatile the last few years, lots of people just placing bets and spinning wheels.

[wardaddy]

Early 2000 taught us that P/E does matter

That would be may 17th, 2000 to be exact. The day that techs started a 15% decline over the next 5 trading days and the start of a pit which most have never climbed out of. And they took the rest of the market with them, especially the NASD. 9-11 really slammed an already wounded market and we have basically been sideways since we crawled back between 9-11-01 and late 2003

I would not bank on Google. In my simple world, a company is worth about 9-11 times earnings which means Google is right now worth about 10-20 billion. So it's 4-8 times overvalued.

I know goodwill and projections are part of the game but at this point it's a spec play.

I will grant with interest rates so low and cap rates somewhat high that P/Es can be rationalized higher than is the historical norm but anything above low 20s is lots of hope. Good luck to all.

[Moonman62]

Early 2000 taught us that P/E does matter. And matters big.

Early 2000 should have taught us that Central Banks shouldn't invert the yield curve, and that the government should keep its nose out of the economy as much as possible.