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-[ (c)1998 ]-
A stock that has or will have a good product , good management / workforce, low
overhead, trailing P/E of 10 or less, and selling at or below book value, is considered a good value. (trailing P/E = last 1 to 5 years, a leading P/E is a optimistic future forecast by the company) The market has been over valued for the last 10 years with trailing P/E s well over 20s. Government overspending (credit) in the 80's, citizen overspending in the 90's, and technological breakthroughs have delayed and softened the correction, which would drop the stock prices by about 50%.
So put MOST of your money in [ personal investments (family and kids 40%?) and (real/tangible properties 40%?) and F.D.I.C. account (20%?)] The reason for putting only 20% of your money even in a so called "secure" F.D.I.C. bank is that eventually the dollar will lose its value in a global meltdown = (Nightmare on main street part II) . This is because the government will never be able to pay it's 5 trillion dollar debt, and there is no way to keep the Federal Reserve from printing more money; or for the people to VERIFY exactly how many dollars there are in the world. I suspect the future solution to this would be a internet currency unit (I.C.U.) which would start at 2 trillion units (5 billion people times 365 days) and stay at the SAME number throughout the years. These units would be sold as a commodity , they would be serially controlled and assigned to people that buy them. Although you would lose some monetary privacy , we would have currency with integrity, and we would not ever have to worry about theft. The Federal Reserve is a private bank and should be considered as international gangsters that control the world.
You will never hear these facts from Rukyser, mutual fund managers, or the other older greedy people. They figure they won't be around for their mess. When such people leave their empty worthless bodies , they will only leave the stench reminiscent of selfishness. Compare pictures of Rukyser in the eighties to today, and you will see evidence of what selling your soul can do to your body.
The Federal government in the U.S. insures each
savings by F.D.I.C. for $100,000.00 for each account (If you have more,
then put it in different banks). F.D.I.C., insures against things
such as bank failures and robberies etc., (But not against things like
people stealing from your account) The stock market CANNOT be insured
collapse due to its nature, and don't let anyone tell you that it is
The stock market is what you get when you mix a bank , an auction, and
a casino (By the way the long-term odds in gambling are ALWAYS against
you). In stocks sometimes you will get a higher interest than banks and
other times you will lose your shirt. If you pay $1000 for a stock (if
the companies net worth or book value is $100,000 you are now a 1%
and get $50 in earnings (income by the company for your share after one
year ) it would have a P / E ratio of 20. ( $1000 divided by $50
). So a lower P/E ratio is better for you. You will have to
this "interest" rate ( 5% in above example) with the banks and also
the risks of stock. Due
to risk in stocks people usually want at least double the bank CD rates.
The main reason for stock prices to shoot up in the past 10 years is not earnings (since P/E are over 20 ) In the eighties the FED was encouraged to overspend and drop interest rates (encouraged by stock holding politicians maybe?) So people started to turn away from banks and to bid on stocks that were already overvalued , to get a better return on their money. So new money FLOODING into the stock market is the reason for the stocks to soar and not because the companies are really worth that much. Book value or net worth is = [ total assets- total liabilities ] , you will notice that most companies are also heavily in debt (Negative net worth).
The Federal government says it has a surplus year in 1998 , what they really mean is that they can now balance a check book. Nobody in D.C. has the guts to talk about the $5 trillion they still owe. Congress now wants to put Social Security money into stock market to keep the bull craps market going. How long can the trend continue is very debatable. But the longer and more intense the OVERPRICED bull runs the bigger the bear must be to correct him.
Note: In 2002 Rukyser got fired from P.B.S.