Big Tech's Elusive P/E

New York Attorney General Eliot Spitzer has trained his sights on mutual fund managers. Formal charges have not been filed against any fund family, but Spitzer's latest implicates a number of biggies in schemes to help a hedge fund execute trades that cost small investors billions of dollars.

Disheartening news to be sure, this should not come as a total shock to Fools who have long known the potential drawbacks of actively managed mutual funds. Yes, there are good, well-managed funds out there, and there are times when investors have few alternatives to mutual funds, but by all means, be careful.

In today's Motley Fool Take:

Big Tech's Elusive P/E
Shameless Plug: Broker Center
Retailers Rock August
Quote of Note
House Party Continues
Discussion Board of the Day: Buying or Selling a Home
And Finally...

By Matt Richey (TMF Matt)

Yesterday, I was researching a story and wanted to cite the price-to-earnings (P/E) ratio on the Nasdaq 100 Trust(AMEX: QQQ). You'd think this would be readily available. After all, many services offer the P/E on the S&P 500 (including Multex and Barra). But several different Google searches turned up nothing.

Finally, I found a subscription website, DecisionPoint, that keeps track of the Triple-Q's P/E. The answer? A whopping 77 times trailing earnings. But perhaps even more intriguing than the number itself is how difficult it is to find.

Is anybody paying attention to the Nasdaq 100's valuation?

The QQQ -- essentially a vehicle that offers quick, easy exposure to large-cap tech stocks like Cisco(Nasdaq: CSCO), Intel(Nasdaq: INTC), and Oracle(Nasdaq: ORCL), among others -- trades over $2.5 billion per day. That's almost five times the volume of General Electric(NYSE: GE) and 50% more than Microsoft(Nasdaq: MSFT). And yet its valuation is almost completely obscure. That's frightening.

So far this year, the Nasdaq is up an incredible 38.7%. This far outpaces the S&P 500 and Dow, which year-to-date are up 16.6% and 14.7%, respectively. And this during a year that dividends received a massive tax advantage, which should've lifted dividend-paying stocks, few of which trade on the Nasdaq.

So what's going on with the Naz? Either the market is discounting a full-scale recovery in technology spending over the next few years, or else we're dealing with sheer speculation. Personally, I see more signs of the latter than improving technology fundamentals. That the P/E ratio on the Nasdaq 100 is so obscure is yet another sign that speculation may be the driving force in this market.

Shameless Plug: Broker Center

If the latest scandal in the fund world has got you thinking, you might want to consider looking into either low-cost index funds, exchange traded funds (ETFs), or even building your own portfolio of common stocks and bonds. Whatever course you chart, you'll want to at least consider using a discount broker. Our Broker Center is the place to start.

Retailers Rock August

After a mostly disappointing spring and summer, August provided a reprieve for several of the most prominent U.S. retailers. Because it marks the beginning of the crucial back-to-school season, the month is an important one. Whether driven by tax rebate checks, or the need for the latest cool clothes for the classroom (or some combination of both), shoppers at most stores returned and helped boost results.

The king daddy of retailers, Wal-Mart(NYSE: WMT), topped its own raised guidance, with a comparable store gain of 6.9%. Fellow discounter Target(NYSE: TGT) also had an impressive showing, with a gain of 5.7%. Warehouse club giant Costco(Nasdaq: COST) beat them both with a 9% increase.

Results among the specialty retailers were, as usual, more mixed. Two teen retailers that have consistently performed well this year, Hott Topic(Nasdaq: HOTT) and Pacific Sunwear(Nasdaq: PSUN), kept the party going with comps increases of 11.8% and 15.6% respectively. Another teen fave, accessories chain Claire's(NYSE: CLE), posted a gain of 8%.

Not all retailers catering to the MTV set had it so easy, though. Abercrombie & Fitch(NYSE: ANF) reported another disappointing month, with comps down 11%. Rival American Eagle(Nasdaq: AEOS) hardly fared any better with a drop of 10.4%. Wet Seal(Nasdaq: WTSLA) rounds out the triad of bummers with its comps decline of 10.7%.

Gap's (NYSE: GPS) comp sales grew by 4%, which was below expectations for the rebounding retailer, while Ann Taylor(NYSE: ANN), on the other hand, had a good month with comps up 8.2%. Chico's FAS(NYSE: CHS), which reported its August sales results yesterday, again posted outstanding numbers, with comps up 19.4%.

The back-to-school story isn't quite over yet. With these retailers now in the second month of their third quarters, we'll have to wait and see if September proves to be as good as August before we can say how the season is shaping up.

Quote of Note

"I find it absolutely stunning and almost inconceivable that anything like that could possibly go on with any fund firm that has even a hint of value to its reputation." -- John Bogle, Vanguard founder, on Eliot Spitzer's probe of fraud and securities violations involving five mutual fund companies

House Party Continues

So, you say that the recent spike in interest rates has got you down. You were all set to refinance your home or slap that down payment on your dream house when the most horrific thing happened -- Fed Chairman Alan Greenspan moved your cheese.

Get over it. Things aren't that bad. You can still buy into rates that aren't much higher than they were a year ago. They remain sharply lower than the going borrowing costs from three years ago when the 30-year mortgage peaked at 8.3%.

So don't let missing out on the June bottom derail your plans. It's not souring the home-minded spirits of others, that's for sure. Last night, Lennar(NYSE: LEN) reported a 22% uptick in new home orders for the August quarter. Sure, that included the euphoric June frenzy, but the company has still managed to sell more homes even as rates started to pick up. Lennar's not alone at the open house party. It was joined by KB Home(NYSE: KBH), which posted a 15.7% gain in new home orders for the same three-month period.

While the other homebuilders haven't released recent order data, the sector's resiliency rests in the body language. Back in July, weeks into the gradual climb of mortgage rates, D. R. Horton(NYSE: DHI) hiked its dividend while Pulte Homes(NYSE: PHM) and Centex(NYSE: CTX) revised their full-year profit outlooks sharply higher.

This isn't a sector that's going away anytime soon. If you build it, they will not stop coming. So, go ahead, buy into your dream home. The homemakers will leave a light out for you.

Discussion Board of the Day: Buying or Selling a Home

Have interest rates had an impact on your housing decisions? Is it too late to make that move? Visit our Home Center to ponder your various financing options. Or join us on the Buying or Selling a Home discussion board. Only on Fool.com.

And Finally...

If you're a regular reader, you've probably noticed that we're pretty high on dividends here at The Motley Fool. And why not? You just can't say enough about dividends. For his part, Jeff Fischer has 3 Reasons Dividends Rule. Hey, they're very good reasons! If, for whatever reason, you're looking for a little more adventure, Paul Elliott offers a Defense of Tech, and Dayana Yochim tells you simply to Charge It to the Man.

Contributors:
Bob Bobala, Robert Brokamp, Paul Elliott, Mathew Emmert, Jeff Fischer, Tom Jacobs, Jeff Hwang, LouAnn Lofton, Alyce Lomax, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Dayana Yochim