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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Mike Buckley who wrote (22770)4/14/2000 8:33:00 PM
From: pann1128  Read Replies (2) of 54805
 
Hi Mike,

Thanks for the level-headed postings. This week has got me thinking a bit more about valuations. Looks like the market over reaches on the upside and the downside. Since the second half of last year, we had many companies companies in hot sectors go up to insane levels in terms of price to sales and PEs. In this whole frenzy, some of our beloved Gorillas also had major expansion in PE. Made some of us quite euphoric, but I am still mystified by this valuation game. Just to illustrate my point, CSCO has been growing about 30% for the last 2-3 years. That growth is expected to continue for some more years. Their PE at the peak was 140. Historically they have maintained a PE of around 70 to 80. Now, in the space of a few months, their PE and PEG doubled. Somewhere along the way valuations for Gorillas do come into play don't they? Not worried about timing the market, but trying to gauge reasonable entry points for buying Gorillas. If I had been a new investor and bought CSCO at $82, I would have a 30% loss now. Again, not trying to catch bottoms, but trying to asses reasonable valuations when I make the initial investment.

Sorry for rambling. Just trying to gather my thoughts, and today seemed like a good day to do it. Your thoughts will be greatly appreciated.

Cheers,

Piyush
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