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Technology Stocks : Semi Equipment Analysis

SOXX 312.18

-0.2%

Dec 9 4:00 PM EST

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To: Return to Sender who wrote (10397)	7/4/2003 12:09:08 PM
From: Cary Salsberg	Read Replies (1) of 95541

RE: "It is going to take some extraordinary improvements in earnings to justify these P/E ratios if you ask me." About 1987, Ken Fisher published a book called "Superstocks", which, among other things, popularized the concept of P/S, price to sales ratios. He observed that when a company's sales fell 10%, its earnings fell 80-90%. If the company is a "super" company, and the stock price followed the earnings, then you have a "superstock". The point is, that the increase in sales that will come with a real recovery will easily produce your "extraordinary improvements in earnings." The market is discounting a recovery. The question is not the PEs, but if and when the recovery actually happens.

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