<< BP & Thread, what relevance to you give to margin calls and tax-need selling vs. a true rotation to old economy stocks away from the Nasdaq? >>
IMO the first two factors are more important, combined with a simple realization that the 300-600% gains in many tech stocks had caused valuations to become totally unsustainable.
To repeat a comment I made on another board, if the manner of valuing rapid growth companies EVER reverts to long-standing, historic standards, e.g. multiples of earnings relative to growth rates say, PEs of 40-60 for rapid growth, franchise companies, then a lot of highly-favored companies may go down 80-90% from their highs.
Anyone want to make the argument why Cisco, just to take an example, should continue to sell for 120-150 times earnings, when throughout most of its history it sold for 40-60 times? And with growth rates at least as high as expected going forward. Try using multiples like that of estimated 2000 earnings and see what prices you come up with for the likes of CREE, MRVC, SEBL, JDSU, RMBS, SUNW, YHOO, AOL, QCOM, and innumerable others.
BP |
