Summary forecasts for stock markets

<body><table border="0" cellpadding="0" cellspacing="0" width="100%"><tr><td> <font face="garamond, times new roman, times" mstheme> <p> Summary </p> <p> </p> </font mstheme> </td></tr></table><table border="0" cellpadding="0" cellspacing="0" width="100%"><tr><td valign="top" width="1%"><font face="garamond, times new roman, times" mstheme> <p> </p> </font mstheme></td><td valign="top" width="24"></td><td valign="top"> <p>This page uses frames, but your browser doesn't support them. </p> <p><strong><font face="Arial Narrow" size="2" color="#C0C0C0">Shares: Summary</font></strong></p> <p><strong><em><font face="Arial Narrow" size="2" color="#00FF00">Buy on the up arrows,</font><font face="Arial Narrow" size="2" color="#C0C0C0"> </font><font face="Arial Narrow" size="2" color="#FF0000">sell on the down arrows</font></em></strong></p> <p><font face="Arial Narrow" size="2" color="#C0C0C0"><strong>This tool is intended to show the overall attractiveness of shares based on fundamental analysis. The charts show the extent of over - or under-valuation of share prices compared to fair value generated by stock market modelling, from which Best Guesses as to the future are also generated. For comparability, stock market indexes have been rebased to set year-end 1994 at 100. </strong></font></p> <p><strong><font face="Arial Narrow" size="2" color="#C0C0C0">In each chart the stock market index is shown as </font><font face="Arial Narrow" size="2" color="#FFFFFF">the thick white line</font><font face="Arial Narrow" size="2" color="#C0C0C0"> on the right hand axis. The main explanatory variables, fair value generated by using interest rates, shown as </font><font face="Arial Narrow" size="2" color="#FFFF00">the yellow line</font><font face="Arial Narrow" size="2" color="#C0C0C0">, and bond yield, shown as </font><font face="Arial Narrow" size="2" color="#00FF00">the light green line,</font><font face="Arial Narrow" size="2" color="#C0C0C0">  use the left hand axis. Best Guesses for future fair value are also shown on the left hand axis. The Best Guess for interest rates is shown as</font><font face="Arial Narrow" size="2" color="#FF0000"> the orange line</font><font face="Arial Narrow" size="2" color="#C0C0C0">. the Best Guess for bond yield is shown as </font><font face="Arial Narrow" size="2" color="#FF00FF">the pink line. </font></strong></p> <p><strong><font face="Arial Narrow" size="2" color="#C0C0C0">Best Guesses suggest what would happen to fair value based on forecasts for interest rates, bond yields and company profits. Interest rates and bond yields are current actual figures. Company profits are econometric forecasts by PIT for the next year.</font></strong></p> <p><strong><font face="Arial Narrow" size="2" color="#C0C0C0">The model calculates fair values by taking the current level of interest rates and bond yields and next year's profits. Mathematically, P = EPS x 1/Y, where P is the level of share prices, EPS is company profits and Y is the bond yield or interest rate. Bond yields are the more appropriate basis for modelling but are only available for a limited range of countries. For some countries there is insufficient data to enable us to produce a meaningfu econometric model for generating Best Guesses about EPS.l </font></strong></p> <p><strong><font face="Arial Narrow" size="2" color="#C0C0C0">As historic data on whole market Earnings per Share is seldom available, this series has been derived from a variety of other sources of historic data. In order to achieve compatibility these have required considerable adjustments. Thus even the historic data should be considered as estimates only.</font></strong></p> <p><font face="Arial Narrow" size="2" color="#C0C0C0"><strong>Please note the differences between these Summary charts and those for Bonds and Currencies. Since income is not a major consideration for investment in shares, stock market indexes are shown as price only and not in terms of total return. Technical Buy / Sell signals are shown in the Momentum share charts, using price-only indexes, so there is no purpose in duplicating them here. </strong></font></p> <p><font face="Arial Narrow" size="2" color="#C0C0C0">Where European currencies have been converted into Euros, the legacy government bonds and interest rates of the individual countries have been used as the basis for historic data. Thus, for example, Deutsche Mark bonds are used for Germany and French Franc bonds are used for France up to year-end 1998, but both are now based on a common set of bonds denominated in Euros. Profits continue to be based on companies domiciled in each country.</font></p> <hr color="#FF0000"> <p align="center"><font size="2">[ <a href="global_asset_allocation_sitemap.htm" target="_top">Site Map</a> ] [ <a href="index.htm" target="_top">Home</a> ]<font size="2" face="Arial"><br> </font>[ <a href="Chart_Library.htm" target="_top">Chart Library</a> ] [ <a href="ChartLibrary_stock_market.htm" target="_top">Share Charts</a> ]</font> </td></tr></table><table border="0" cellpadding="0" cellspacing="0" width="100%"><tr><td><font face="garamond, times new roman, times" mstheme> <p align="left"><font face="Arial Narrow" size="1" color="#C0C0C0">Copyright © 1999 Professional Investment Tools Ltd., authorised by the Financial Securities Authority. An Independent Financial Adviser. Please read Financial Health Warning and Licence Agreement. UK laws apply exclusively. Principal sources: Consensus Economics, Corel Corp., FIBV, Global Financial Data, PIT, national governments and stock exchanges. Information and opinions are based on sources believed to be reliable and accurate. However PIT does not guarantee this to be the case, and does not accept liability for any loss arising. This is for information only and does not constitute a solicitation to deal in any securities. Opinions are liable to change. Past performance is no guarantee of future success. Last modified: January 05, 2001</font><font face="Arial Narrow" size="2" color="#C0C0C0"><strong>.</strong></font></p> </font mstheme></td></tr></table></body>