enter into a discussion of where some of our old friends and new friends in the Gorilla Game and Royalty Game are at the moment and what their P/E's reflect.
I was in the process of composing a post to Merlin about the momentum players and their possible effect on Q's, and others, price when I read your post. The momentum boys may be able to either control a stock price, or influence a stock price, depending on your point of view. I think, that for the companies of the size we deal with, influence is more likely.
The obvious play for the mo-mo boys would be to participate in the run up, sell short when you think it is near the top, and then sell out quickly forcing the price down and starting a panic that will allow a large short profit. These people would have to do this on a "nudge-nudge, wink-wink," basis, if they are working in concert, to get away with it. Lets look at a large company that recently took a dive, AOL, and compare it to QCOM.
Qualcomm is a Gorilla that has a toll booth on the wireless highway
AOL is a King that owns the Internet portal business
Qualcomm has a market cap of 45.92 Billion and a trailing PE of 257
AOL has a market cap of 188.42 Billion and a trailing PE of 447.
AOL had, at its top of 166 15/16th on April 5th, a market cap of about 216.26 Billion and a trailing PE of 527.
When I look at these numbers, and the comparison, Qualcomm could double again this year and it would still be 1/2 the present market cap, and at the present trailing PE, of AOL.
This means, to me, that we can go a long way before we need to worry about an artificial price drop being generated by the mo-mo crowd.
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