Dollars and Jens
Friday, January 30, 2004
More than 3000 firms are listed on the NASDAQ. Our data set includes the 489 largest firms; their combined market value was $2,200 billion and their forward earnings are about $50 billion for a price earnings ratio of 45. Five firms - Microsoft, Intel, Cisco, Dell and AmGen - account for nearly 50% of the earnings and one-third of the market cap. The price-earnings ratio for the remaining firms is 56. ... [T]here is no way that the earnings of NASDAQ firms as a group can increase so that the rates of return to the owners of stocks of this group will be higher than the rates of return from buying a US Treasury price level indexed bond.
Thus asserts University of Chicago Economist Robert Aliber, who apparently has a terrible prediction record, but deconstruct his data and his argument.

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