who knows, it probably will. as i have argued on various occasions, once stock prices disconnect from reality, there's nothing in the way of the disconnect becoming even greater. in other words, once the Nasdaq p/e reaches 300, why not 400? obviously the p/e ratio has become a meaningless bit of data at this point. Cisco now trades at 40 times revenues, which simply makes no sense. therefore, they could just as well push it to 80 times revenues - it still would make no sense. it's like a collectible, like a coin or a comic book (of course it's not exactly the same, i just use the analogy to help convey the basic premise of the argument)...the intrinsic value can be the same tomorrow as it was yesterday, and still the thing can double in price. therefore one can simply not predict anymore what will happen to valuations in the big casino...as one 'analyst' put it so succinctly, "no price is too high for Cisco".
i have basically stopped using fundamentals as a tool for evaluating stocks. this will only make sense again after a bear market has normalized the situation. in the meantime the only factors that are meaningful in that regard are the pace of credit creation in the US and the external value of the dollar...
regards,
hb |
