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Politics : Idea Of The Day
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To: IQBAL LATIF who wrote (29187)10/23/1999 7:58:00 PM
From: Suresh  Read Replies (1) of 50167
 
Hi Ike,

thanks for the response. Couple of things;

1) Productivity increase in high tech companies --- Actually if you consider option grants for employees these companies would be cash flow negative... including the mighty MSFT.

2) PEG: When I started investing in 96... I used to sell when the ratio reached 1.5. I am not afraid of buying companies with a PE of 1000 or higher if the growth is 1000 or higher (not the immediate year... but the year after). Now a days it is very rare to find good growth companies at a reasonable PEG. So, I am just a trader and not an investor. I think ratio above 1.5 is absurd. What about you ? When I have time, I will try to plot PEG ratio time shifted to see how it looks for companies like NOK, CSCO etc.

>if the same technological change would have come in the auto industry,
> they would be able to create a car that travels at the speed of
>sound, runs 600 miles on a thimble of gasoline and costs less than
>US $ 2

Yep.... and it could be failing/crashing badly every other day without any reason... Sorry no reboot for life as we know it yet... everything has its limits. To think everything (concept, field) should be evaluated with the same set of mind is ridiculous (if I understand your line of thinking about W.Buffett... you are saying same thing)

>WB: HIM AS PROPHET OF INVESTEMNT

Nope... I don't think anyone would think like that but I surely think that he is a master in his field. I would have loved him more had he invested in tech stocks but I have no complaints holding his stock. I like the diversification. Just think about this.... if every one had 100% of their investment in technology what would have happened to the rest of industry/economy? I don't want to guess the ramifications of such an attitude.

> Only 35% has used phones..

More than 50% still lack the basic necessity of life. We have very long time to go before everyone could afford phone. It would be a miracle if we can decrease the poverty at the rate of technology growth.

> wage inflation is dead

Are you sure about this..... ? It is present in high techs... but in a different form called ESOP.

I don't think the business model of YHOO or AMZN is suspect... but I question the valuation.

With all my valuation reservation I still invest(rather trade) in companies like VIGN, AGIL, PHCM etc... As they say "To be successful in trading the market one has to be as intelligent or dumb as the market". Or as I heard on TV other day "why do you complain that only few stocks are going up while others are going down? Just invest in those companies which are going up and you will be fine".

Regards,

Suresh
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