What I want to know is, at what valuation will stocks become cheap enough to own?
Greg,
For some perspective, for CSCO to be at the same valuation it was in early October 1998 (P/E 30, a fair value for a 30% grower, I think), it would have to trade at about $15-$17, based on 7/00 estimates. Even if you argue that CSCO deserves a 50 P/E, that makes it a buy at $25. I don't see the technology leaders becoming a value anytime soon, and I was very bullish on CSCO et al for a very long time, until they went vertical earlier this year (I was buying the "old old industrials" when they were still bargains).
That said, I don't think CSCO will get to that level anytime soon. I suspect we'll bottom in the 2600-2900 range, since support is pretty good there, and it would be a retracement roughly equivalent to what the Dow went through, wiping out a whole year's gains. Just my humble opinions, and my crystal ball doesn't work any better than anyone else's.
Best Regards,
Paul |
