LETTERS
The Economy, Cont’d
Recently, the stock market cheerleaders have become enamored with the so-called “Fed Model” which says the current market is undervalued. Is it really?
The reason for this undervalued signal is the model’s use of forward operating earnings, i.e. over-inflated guesses with accounting fluff, instead of trailing “as reported” earnings. After all, we’ve seen how accurate CFOs and analysts can be with estimates! If you change the earnings variable to that listed above, you get a drastically different, and I might add realistic, picture. Recently, this revised fed model, instead of flashing 30% undervalued, was flashing a needed price drop of an additional 25%!
Here are some other reasons why the market could fall much further. Using S & P;’s “as reported” earnings, the recent P/E ratio was 30. In 1990 and 1994, during the latest rough markets, it was 15. That points to a possible 50% drop. According to Morningstar, the S & P; 500’s PEG ratio was recently 1.5. It needs a 33% haircut. The average bear market contracts the P/E down to 10, which would be a drop of, oh never mind. You get the idea.
It is time to seriously question the traditional wisdom of high levels of market exposure and the “buy and hold” mentality. The risk of more severe losses is too high.
Steve K. Rumsey
Rumsey Asset Management
Santa Ana
El Toro, Cont’d
It’s time for El Toro Airport activists to give up the ghost. The court decision Sept. 18 on Measure W was clear: The people have a right to rezone via the initiative process, and Measure W wording was not misleading.
Airport activists Lichman, Ellis, and Nestande should recognize reality and return the $250,000 remaining out of $3.7 million in Newport Beach grant money and get on with more productive activities.
Michael Smith
Mission Viejo
The judge has spoken,58% of Orange County voters supported a Great Park at El Toro. That is a majority, and in a democracy the majority rules. While the pro-airport Newport Beach attorneys will always feel that money, power and the ability to litigate trumps the majority rule principle, I’ll gladly take the more idealized view that all of our voices matter.
Jaysen Gillespie
Irvine
El Toro supporters should not worry about the Sept. 18 court ruling upholding Measure W. The decision was going to be appealed, no matter the outcome. There will be at least two more hearings. If that fails, then there’s always the initiative and/or legislative process, if not the judicial process.
Believe it or not, El Toro opponents have been an inspiration for me to keep going when the going gets tough. Did they quit after Measure A passed? Did they stick their tails between their legs and run away after Measure S was handily defeated 59-41%? Did they wave the white flag after Measure F was invalidated by three straight courts? Nope, not at all. And, we shouldn’t surrender either. As Yogi Berra once said, “It ain’t over until it’s over!”
Rex Ricks
Huntington Beach
