Letters: March 19, 1997


Evaluating the Stock Market
In Professor Uwe Reinhardt's February 19 cover story, "Is the Stock Market Overvalued?," the example he uses of how to calculate a priceearnings ratio calls to mind the traveling salesman's reply when asked how he could count the cows in a field so remarkably fast: "I just count the legs and divide by four."
The author begins his explanation by assuming that a hypothetical company has 100 million shares and makes no mention of the time period covered by the earnings. Although all figures in stockmarket reports are consistently given on a pershare basis, Professor Reinhardt and his students furnish only the company's total earnings: $75 million for, presumably, one year. It is left to the reader to work this out as 75 cents a share. Reading between the lines of the explanation, the reader can then divide 75 cents into $12-the only pershare figure cited in the example-to come up with the price-earnings ratio of 16 supplied by the author.
Stripping away those figures to arrive at such a simple result is not in a class with counting cows by the legs instead of by the head, but it's still more trouble than it needs be. The price-earnings ratio is such a transparent concept that The New York Times can explain it in less than 20 words: ''the price of the stock, divided by earnings per share reported over the last four quarters."
Having cleared out the undergrowth in the pasture, so to speak, I have what I trust are constructive observations about Professor Reinhardt's timely article. Some of his readers may get the impression that expectations of future dividend growth constitute the primary basis on which stockmarket investors make their decisions. But as I am sure Professor Reinhardt and his students are aware, dividends are not necessarily uppermost in the minds of many Wall Street highflyers-particularly in this period of high expectations for nearterm earnings growth.
Finally, and in all seriousness, I admire the author for plainly stating his conviction that a priceearnings ratio of 20 for Standard & Poor's 500 Composite represents "highly optimistic assumptions." Such forthrightness is refreshing.
Lawrence Heyl, Jr. '40
Nyack, N.Y.

Antisemitism
Thank you for the February 19 article about my books and my winning the Weaver Prize for scholarly writing. The award was a great and unexpected honor, and I appreciate PAW's interest in my work.
One or two points in the article need clarifying as to Brandeis University, where I teach, and antisemitism. Your reporter calls Brandeis a Jewish university. So it is, somewhat in the sense that Princeton is Presbyterian in its origins, and in its presidents through Robert Goheen '40 *48, and in a tradition of Christian humanism that was very much alive when I was an undergraduate and I hope still flourishes today.
At the same time, Princeton has long been a nonsectarian university. Brandeis is similar in that respect. Sometimes it is called "nonsectarianJewish." This idea is what philosophers call an "essentially contested concept." It creates a vital tension in the university. Brandeis cherishes its Jewish heritage at the same time that it is open to faculty and students of different creeds. Many of us are not Jewish, and we are made to feel fully part of the institution.
On the subject of antisemitism, the answer that I tried to give your reporter was a little different from what appeared on the page. I am a Lutheran who teaches at Brandeis, and my name is spelled the German way. Some people think I'm Jewish, and from time to time I am amazed (always totally amazed) to find myself on the receiving end of antisemitism. This is an experience that nobody ever gets used to-it always comes as a shock. Whenever it happens to me, I suddenly discover in a direct and personal way something (only something) of the pain and anger that many of my Jewish friends and colleagues have experienced all their lives. If others who are not Jewish could share that experience, then maybe we might at last have an antidote to the poison of antisemitism that is still too virulent in the world today.
David Hackett Fischer '57
Waltham, Mass.

Nuclear Fusion
In your February 5 cover story about the Mpala Research Centre, its director, Nick Georgiadis, labels nuclear fusion a "childish distraction" compared to understanding the global environment. This statement is indeed incongruous, since in the very next paragraph the article states that an energy shortage is likely to threaten all of Africa after the year 2000. Moreover, the problem in Africa is dwarfed by the problems in India and China, simply because of their greater populations. It is exactly this problem-the need for safe, clean, and abundant energy- that fusion addresses.
Remarkable advances have been achieved this past year in fusion research. Experiments in the U.S. (at the Princeton Plasma Physics Laboratory) and Japan (at Naka) have reached plasma temperatures 40 times hotter than the center of the sun, more than enough to ignite a controlled thermonuclear burn in a deuterium-tritium plasma. It is extremely exciting that these plasma conditions approach those necessary to sustain fusion reactions with advanced fuel mixtures, such as hydrogen-boron, which release energy without any radioactivity. Power plants based on this fuel mixture are envisioned to be compact and easy to maintain, similar in design to modern gas-powered turbines-ideal for use in developing nations.
The Department of Energy has recognized the need for research on advanced-fuel fusion power plants and recently directed Princeton to lead these efforts. Perhaps someday Mpala will be powered by a small, 10-megawatt, hydrogen-boron fusion reactor; then hot showers and electrical appliances will not be restricted to a small cadre of visiting scientists, but will be available to the entire population in that area of Kenya.
Samuel A. Cohen
Director, Program in Plasma
Science and Technology
Princeton, N.J.

Community Service
A "Locomotive" to Princeton and to Professor Burton Malkiel *64 for their commitment to supporting student volunteer activity and the creation of the new community-service center (On the Campus, February 5).
The university is right to foster the instinct for service, and "Princeton in Service to Community" is equally as important as the more well-known "Princeton in the Nation's Service." As one who has watched more than enough puffing politicians quote de Toqueville to justify yet another federally mandated effort to harness the nation's volunteer spirit, I say bravo to those who encourage a new generation of quiet and unassuming volunteers to commit to service where they find it-rather than on a national stage.
As the executive vice president of the National Center for Voluntary Action (spawned in 1970 by HUD Secretary George Romney's Cabinet Committee on Voluntarism), I can attest to how soon such highflown initiatives run out of resources and momentum. As President Clinton launches yet another effort with General Colin Powell and former HUD Secretary Henry Cisneros, one wonders how many remember the similar initiatives of even his recent predecessors.
Let's encourage the community-service center to engage our students and soontobe alumni for the long haul. Their real contributions to real people in real communities will long outlive fleeting recognition.
Thomas R. Donnelly, Jr. '61
Falls Church, Va.

I am grateful to Professor Malkiel for making community service a centerpiece of the 250th and for proposing the creation of a center for community service. He has brought faculty, staff, and students together on this project, and he has been unflagging in his commitment to build an endowment for it.
I am also grateful for the commitment of students in planning the center. Representatives from campus service programs have met several times recently, and they will be meeting with the Alumni Council Committee on Community Service and the Office of the Dean of Student Life. Such conversations will forward the vision for central administrative support for community service.
Julie Rawe '97's article stimulated discussion among a variety of constituencies on campus. Planning for the center that involves students, faculty, and staff will enhance the effectiveness of all service groups.
Joseph C. Williamson
Dean of Religious Life and the Chapel
Princeton, N.J.

Faculty Kudos
Thank you for the November 27 Faculty File on Soho Machida. As an East Asian Studies major and one of his thesis advisees, I was lucky to get to know him as a mentor and friend. Teachers like Professor Machida earn for Princeton its great reputation for undergraduate education. He is the only professor I know that not only could be found in his office until midnight, but who would welcome students seeking advice on theses, girlfriends, or the meaning of life. If student respect counts for anything, he is one of the faculty's best.
Micah Burch '95
Cambridge, Mass.

In the wake of his November 27 obituary, I am sure that PAW will get enough stories about Hubert N. Alyea '24 *28 to fill its columns for months, but I could not resist adding mine. One warm spring day, in the middle of a lecture, Professor Alyea, with bamboo pointer in hand, continued speaking to the class while creeping toward a dozing student. Crashing the cane down on the desk and missing the startled offender's head by inches, Alyea exclaimed over the ensuing laughter, "Pesky flies!"
The only other utterance by any professor that I recall verbatim from my years at Princeton is also Alyea's. At the end of his final lecture, he said, "Silver and gold have I none; but such as I have give I you." (Acts 3:6)
Jack C. Childers, Jr. '60
Baltimore, Md.

Mysterious Letters
I apparently have not been reading PAW with sufficient care lately, for I noted three initials in the January 22 Class Notes that puzzled me. I assume that "w" before a class numeral means widow, but what do "h" and "k" mean?
As one who writes regularly for Pacific Islands Monthly, an obscure publication in the South Seas, I envy your proofreading. I bet you have paid proofreaders, and that they are native speakers of English.
David S. North '51
Arlington, Va.

Editor's note: You're correct about the "w." Respectively, "h" and "k" mean "honorary" and "kin." The other letter we use to denote an alumni connection is "s," for spouse.


paw@princeton.edu