BM> view of _future_ earnings.  So, a low PE tells you that the market 
BM> (rightly or wrongly, usually rightly) expects the company to perform 
BM> poorly in future.  

I'm no expert at this, but I have recently bought stocks, and I
took the view that the market was normally taking a short term
view (ie less than 5 years).  If you are looking at future
earnings, I fail to see why these should change on a daily basis
unless the first prediction was wildly inaccurate, the second
one was just as inaccurate, etc etc.  E.g. Pacific Dunlop was
being traded at $3.50, then $2.67, then $3.50, then $2.80, over
just a few months.  You can either say that the $3.50 didn't
fully factor in the losses that the pacemaker is going to produce,
or you can say that the $2.67 has overreacted to the pacemaker
problems and didn't factor in the fact that in the longer term,
GMs will change, unprofitable bits of the business can be sold
that sort of thing.  What you can say, definitively is that AT
MOST one of the prices can reflect long term earnings predictions.  
So I take the tack that usually the market has the long term future 
earnings totally screwed up.  BFN.  Paul.
@EOT:

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