Stocks were overvalued two months ago, based on super-rosy projections. The move from tech stocks' price-earnings ratios of 50 to 30 will greatly reduce valuati

Stocks were overvalued two months ago, based on super-rosy projections. The move from tech stocks' price-earnings ratios of 50 to 30 will greatly reduce valuations. But it doesn't mean that the economy is falling apart forever. It just means that it's not worth paying nearly so much for any company's growth curve. Let's not forget the impact of big stock buybacks, which served to reduce the float of shares and make per share earnings go up. This is small-time financial card shuffling, but for a few years investors believed that all kinds of companies with only modest sales growth were incredible profit-making machines because their per-share earnings were surging. So these companies got very high valuations. Now if we're heading into hard times and there's no available cash to do the buybacks, the game stops. And with that -- the illusion of fast growth companies goes away