The Justa and Lars Honors Bob Brinker Investment Club Thread Message Board

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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread

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Jan 8 4:00 PM EST

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To: MrGreenJeans who wrote (432)	7/21/2000 9:44:24 PM
From: Dave Shares	of 10065

<<Instead of having earnings grow at 23% you may find earnings growing at 10% to 15%. Moderation by my definition. >> In my opinion, the only reason that the market will value a stock to yield a triple digit P/E like many are valued on Nasdaq (assuming they have any earnings), other than tulip speculation, is because of analysts that believe that companies can increase their earnings at huge multiples (i.e. 100% in some cases) and continue that rate of growth over 5-10 years, which will yield a stock with a P/E ratio closer to what the market has lived with historically. Once it is determined that this kind of earnings growth is not sustainable, or as you say, once earnings growth moderates, these valuation models, in my opinion, go right down the drain. And that is what I believe represents the greatest risk to the technology sector at their current valuations. David

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