Hi lml, thanks for your insightful comments. I think you are right on target with your analysis.
IMO, the tech stocks are/were over-valued. However, the question is what is over-valued? I think the answer to this question is determined by what the investment community is willing to pay for a company's stock. IMO, pe's that are in the range of 20 to 40 are right in the ball park. When you get into pe's that range from 40+ to 60, you are assuming some real risk. When you exceed a pe of 60, you are now walking on thin ice. So, I now believe that we are going to see the high pe tech stocks come down in their valuations. Of course, this will cause server pain to many investors. I wish to note that my comments are applicable to the hardware/software tech stocks and the internet stocks. Of the two groups of tech stocks, the internet stocks are going to suffer the most.
IMO, the future growth of the global economy still depends on advancements in technology. And the rate of change of technological advancements just keeps going up and up. So, I think the tech companies will continue to see earning growth that exceed those of non-tech companies.
So, for the long term investor, I believe tech stocks are still the place to be.
Stock Bull |
