MMW, according to Yahoo! CSCO has a PEG of 3.07 while LU has a PEG of 1.37. I think it is fair to say that CSCO command a much higher premium for growth than does LU. This has nothing to do with the relative merits of the two companies -- simply how much you are willing to pay for growth, and prospective 5 year growth is much cheaper with LU (24% estimated) than CSCO (30% estimated).
I have held CSCO for some time, but sold simply because the valuation of the stock appeared extreme to me. If CSCO were trading around $40 I would be buying.
Diversification is never a mistake! I think you confused maximizing returns retrospectively with creating an optimal portfolio. I am a growth investor and I maintain a portfolio of around 10 or so growth companies (plus certain core holdings like IBM, T, the baby Bells, and TYC). I expect that some of them will end up doing poorly, but diversification will buffer that problem. For example, my portfolio held ATI, ASND, BMCS, CSCO, CTXS, DELL, LU, NETA, PSFT, TLAB, VTSS, VISX. NETA was a horrible loser, and I made a small amount of money on PSFT (both of which were jettisoned from the portfolio). All of the rest were tremendous winners. Had I put all of my money in VISX I would be living in a villa in the south of France right now, but alas, diversification limited the gain. But it was the prudent thing to do.
TTFN,
CTC |
