In the WSJ today there was an interesting article regarding P/E ratios and using them to determine appropriate buying and selling opportunities. The article was on C1 and the author contended that although the S&P is trading at 13.2 times expected earnings, this number is likely to drop. I find myself hoping that the author is correct in his analysis as more profitable buying opportunities will open up. The S&P has an average P/E (with data collected from 1989) of 16.5 which translates to a current undervaluation of 17% relative to the average. Personally, I feel that there is still downside risk to the market and we have not seen a bottom to this current bear trend. Regardless, however, taking into account a dollar cost averaging approach mixed in with our value/fundamental platform the buying opportunities are abundant. Both Ben and I agree that right now as a value investor is like being in a grocery store hungry with all the food half price (pretty lame quote, unlike Buffett I lack in this skill).
Another question I must ask our readers is what newsletters, newspapers, and magazines are you reading? Personally I read the following:
Business Week: I view this as the “USA Today” of business publications. You receive alot of overview and some detail although I really enjoy the broad spectrum of topics they cover.
Economist: Fantastic magazine with detailed in depth topics from politics to business. I learn more about obscure topics from this magazine than from anything else I read.
Harvard Business Review: More academic, but still extremely interesting and very in depth well written articles. This is a monthly periodical in comparison to the weekly issues of the two above mentioned magazines.
Finally my daily newspaper is the Wall Street Journal (the bible) as well Barrons which is a weekly newspaper released on Saturday’s.
I would also like to mention that I am not endorsing any of the above mentioned publications nor does ModernGraham or any of its staff receive any financial compensation for the advertisement of said publications. Merely, these are what I personally read weekly and am curious as to what the rest of our community reads.