Lucent Technologies (LU) Message Board

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Technology Stocks : Lucent Technologies (LU)

LU 2.550

+2.4%

Dec 1 3:59 PM EST

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To: John Malloy who wrote (9090)	8/10/1999 7:55:00 AM
From: GVTucker	Read Replies (3) of 21876

John, RE: your earnings model... In addition to Chuzzlewit's response (I agree with his points, and won't repeat them), there is one other issue I would take with your earnings model. I don't worry about games the firm might play with stockholder equity because investors play counter-games when they adjust the price/book ratio they are willing to pay. Whatever game both play, the stock price is always equity per share multiplied by the price/book ratio. This makes the assumption that the market is efficiently pricing the security on a price/book basis in the first place. If this is the case, then individual security selection adds no value, and you're better off just indexing everything--which, BTW, I do not do.

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