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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 78.39+1.3%Nov 19 3:59 PM EST
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To: John Malloy who wrote (33268)4/2/2000 3:42:00 AM
From: Kashish King  Read Replies (2) of 77400
 
John, stock prices are chaotic in the mathematical sense. They defy simple predictive models and algorithms created by the best mathematical minds have yet to create a solid model that holds up over time. So save the wear on your pencil and digest some simple facts. It's going to be increasingly difficult to grow the current 15 billion dollar revenue stream for a variety of competitive factors, even thought the product volume and breadth may increase. When revenues do flatten out the company will be worth what flat revenue companies of this size are worth: 2 or 3 times revenues in terms of their market capitalization.

So tell us how CSCO is going to grow revenues from the astonishing 15 billion they now enjoy to 200, 500 or 1000 billion? You know, this is nothing more than a colossal gambling operation on behalf of naive investors. Simply stating that traditional valuation models don't hold is a convenient ploy to keep the house of cards standing. The current valuation has more to do with pokemon-like reasons than real valuation: a bunch of naive investors who don't actually have any clue what underlies the price of a share.

The markets have turned into a Vegas-style casino and that is driving demand for stocks with little or no value. The stocks that have some value (like CSCO at 15 billion annual revenues) are being valued at 500 billion based on nothing more than empty statements about old valuation models being invalid. That bogus rationale is used regardless of where the stock is so the rationale is worthless. They just keep parroting the same old line no matter what the stock does.
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