Right now Fannie Mae is trading at a price to earnings multiple that is below its growth rate, yet Fannie Mae is one of seven companies in the SP 500 that's grown its earnings double digit for the past 13 years.
More Quotes from Vince Farrell:
So, I think when you're at that sort of multiple level, there's very little you can do to fulfill the expectation and an awful lot that can happen that will disappoint investors and give you significant downside risks, ... Having said that, a lot of stocks in the tech sector are trading at multiples that are within a coffee cup visit of their growth rate. And I think that might make a whole lot of sense.Vince Farrell
With more and more people going online, you're going to need more power, ... That means Intel's going to sell more chips. I think you want to own Intel for the next couple of years because it is the engine of the Internet.
Vince Farrell
Oddly, it was sparked when Lucent's chairman said they were going to be profitable, believe it or not. And then what happened it seemed that the basic industry stocks started to do somewhat better.
Vince Farrell
I think the market tends to rally in front of a Fed meeting, ... I think what is going to happen is no action (to raise rates), hawkish comments and the rally fades, because what you then have to turn your attention to is what will earnings be. If growth goes from 5.5 percent to 3.5 percent, earnings are going to slow.
Vince Farrell
As soon as the Federal Open Market Committee wraps up its meeting, we're going to start worrying about what Act II is, ... Will Mr. (Federal Reserve Chairman Alan) Greenspan have to raise rates again We'll kind of go back into the whole soup all over again.
Vince Farrell
The market has been choppy because it's trying to figure out where oil prices are going to go, how fast interest rates will rise, and what these two things mean for corporate profits. It's going to remain choppy until it gets more clarity.
Vince Farrell
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