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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 228.30+0.6%1:49 PM EST
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To: Tom Kearney who wrote (92000)1/24/2000 3:50:00 AM
From: Skeeter Bug  Read Replies (1) of 164684
 
tom, let's look at it this way:

stock return:

1: $1.065
2: $1.134
3: $1.208
4: $1.286
5: $1.370
6: $1.459
7: $1.554
8: $1.655
9: $1.763
10: $1.8776

10 Year Stock Total Return: $14.37

Bond:
1: $6.50
2: $6.92
3: $7.37
4: $7.85
5: $8.36
6: $8.91
7: $9.48
8: $10.10
9: $10.76
10: $11.46

10 Year Bond Total Return: $87.71

the guaranteed bond beats the stocks by whopping 510%. the total stock return has grown $0.88 after 10 years. the bond has grown $4.96 - 464% more than stock earnings.

while the percents will be slightly less after 10 years, the dollar value return from bonds will still crush stocks for 20 and 30 years.

the guys math is extremely suspect (bet he didn't go through this MOST BASIC of exercises, did he? he also divides the difference of two interest rate numbers - if the numbers are close enough you can have dow 1,000,000.

the guy is trying to sell books and his investment advice is trash, imho.

>>A stock with a $1 return, growing at 6.5%, has a present value of about $100 if valued like a bond<<

as you can see from the above exercise, this statement is false. the company would have to earn $6.50 and grow at 6.5% b/c the proceeds from the bond would be reinvested. just more garbage, imho.
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