Word: raskobs
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...classic way to gauge a stock's worth compared to its price is the price-earnings ratio, i.e., its market price in relation to profits per share of the company. In the late 1920s, Al Smith's good friend John J. Raskob, who then functioned simultaneously as an officer of Du Pont and General Motors, shocked the investment world by allowing that under favorable circumstances a stock might be worth as much as 15 times earnings. (Despite this bullish tenet, Raskob, like the President's father, Joseph Kennedy, saw the 1929 crash coming; unlike Kennedy...
...their peaks, such stocks as IBM. Texas Instruments. Xerox and Hewlett-Packard climbed to anywhere from 80 to 120 times earnings. Raskob was a piker. Some companies such as Itek and Farrington became glamour stocks even while they were still operating in the red. And as investors became more and more intoxicated by growth, the inflation in price-earnings ratios spread across the board, from speculative risks to the conservative blue chips. Such companies as General Electric. Johns-Manville and International Paper saw their stock prices rise even though their per share earnings failed to increase-or even declined...
...remain uninterested in heavy buying, stock prices could scarcely help falling even farther. And in the mahogany board rooms of 'the mutual funds and banks last week, there was growing talk that the right time to buy a stock is when its price-earnings ratio gets down to Raskob's 15 to 1. Since the earnings of all 30 Dow-Jones industrials were running at an annual rate of $36 in the first quarter of 1962, scrupulous adherence to the 15-to-1 rule, notes Executive Vice President Charles Bliss of the Bank of New York, would mean...
...with $15,000 inherited from his maternal grandfather-and promptly lost it all playing the market. He went to work for General Motors, rose to be assistant treasurer at a salary of $35.000 a year before going to Du Pont as financial adviser to the late John J. Raskob. Du Font's top financial man. Young made his first million by selling short just before the 1929 crash, set up a brokerage firm with an old friend. By picking up securities that looked worthless to most people, then stepping in to run the properties involved, he added another...
...enamels and other finishes from Du Pont, and 38.5% of its fabrics. To show that Du Pont had at least tried to influence G.M.'s buying policies, the court cited letters and memos written by Du Pont officers (none later than 1926). Item: Treasurer Raskob's 1917 report, arguing that purchase of G.M. stock "will undoubtedly secure for us" the entire G.M. market for paints, artificial leather and other Du Pont products. Concluded the highest court: "The inference is overwhelming that Du Font's commanding position was promoted by its stock interest and was not gained solely...