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Letters to the Editor
November 25, 2008

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Dear Editor,

In your article, Jeremy Siegel on why Equities are “Dirt Cheap”, you tolerated Siegel’s grossly inaccurate statement, “Shiller uses an historical average of earnings and I use the current value“ which for the S&P was 11.7 at the time he wrote his original article. 

This is grossly inaccurate, as is unfortunately all too often the case with Siegel.  The S&P P/E is a whopping 16.3: using a current value of approximately 750 divided by $46.13 – the latest 3Q estimate from S&P on Nov 19th.  Further he mislabels his extrapolation as “current,“ but he doesn’t get the correct quarterly figure, which is only $9.91, not $23 as he claims. 

The problem may be because Siegel is using operating earnings, which have been tracked by S&P for only 21 years.  They have no meaningful history and are notoriously overstated, especially bottom-up calculations.  The numbers I am using are GAAP as-reported numbers.

And since when can anyone get a valid annual figure by simply multiplying by four when individual quarterly earnings are so cyclical and relatively disproportional because of business cycle seasonally?! 

His gross data errors and simple-minded reasoning are misleading your readers.


Bob Bronson
Bronson Capital Markets Research
Denver, CO

The following letter is in response to the article “Out of the Red: Russian Markets Poised for Recovery”:

Dear Editor,

Is the massive sell-off of Russian equities due to the Georgian conflict, lower oil prices, and inflation? Or is it due more to lost confidence in the markets due to Putin and others moving against the Oligarchs and turning public corporations into government owned entities?

If it is due to the latter, then low valuations are irrelevant. Fear of increased government control is the issue. Until there is increased confidence, or until perceived risk parameters lessen I question the validity of moving into the Russian markets even if the fundamentals scream loudly that the opportunity is now.

Don Wilber
Merrill Lynch
Juniper, FL


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