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Technology Stocks : All About Sun Microsystems
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To: Wayners who wrote (42665)4/2/2001 9:09:21 PM
From: Prognosticator   of 64865
 
Thanks for your reply, it's so nice to have an intelligent discussion about valuation on this thread for a change.

You do have an interesting dichotomy in your use of the 30-year funds, 7-year horizon, all of which is much longer than short-term traders who tend to think in terms of not holding an open position past the end of the day.

The 'get your money back after 7 years' is also an interesting assumption: doesn't that mean that after 7 years, book value for the stock will be at the $3.13+$4.80 = $7.93 that your calculation yields. If so, then the currently low Price/Book Ratio implies that 7 years from now, the stock will be at $7.93x4.66 = $36.95, which still makes SUNW a better investment than a 30 year bond even allowing for risk premium.

We can continue the discussion when I see your formula, and what assumptions it represents.

IMNSH opinion SUNW is already at a fundamental bottom, but it may not be the global bottom. I called a bottom at $18, so far we're off 20% since then, the only absolute bottom which can be guaranteed for any stock is $0.

That hasn't stopped me investing more of my capital in this fine business at these heavily discounted rates. May those who disagree with my assessment keep their money warm under the mattress.

P.
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