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Technology Stocks : All About Sun Microsystems
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To: Prognosticator who wrote (29764)3/31/2000 1:33:00 AM
From: Alok Sinha  Read Replies (2) of 64865
 
Prognosticator,
You are being naive if you start believing companies (however great they are - SUN CSCO, etc), can justify trading at 100+ PE when their growth rate is 30-40%. The main reason the PEs of firms such as SUN, CSCO, INTC, TXN, AMAT, NOK has expanded to such levels is that relative to the absurd valuations of the DOT coms and B2B names, they seem like a bargain - and a relatively cheaper / safer way to benefit from the new economy. If some sanity were to return to the valuation of the dot coms, then on a relative basis it is logical that the SUNs and CSCO come down too. After all what would you ather have, SUN trading at a PE of 40 with $1-2 fluctuation or at the current levels in a 10-20 point trading range. I would take the latter any day, and manage the volatility of th ortfoli down with options.

Regards

Alok
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