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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 690.38

+0.4%

Dec 24 4:00 PM EST

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To: KyrosL who wrote (51448)	5/21/2000 7:43:00 AM
From: shamsaee	Read Replies (2) of 99985

<For example, throughout the 1970's and 1980's a good rule of thumb for valuing stocks was that the growth rate of a stock be equal to its P/E ratio. Today, leading tech stocks are sporting P/Es that are two or three times their growth rates -- even after the recent fall in the NASDAQ. It seems to me that they have very far to fall to return to normal valuations relative to other stocks, and even further, if they become relatively undervalued, as often happens in bear markets.> The 70 and 80 were completely different than today and completely different economic circumstances with the Japanese eating US corp profits for lunch.As long as US corp are the leader and innovators of new technology, more money will keep flowing into tech stocks by even a greater number of Foreigners and US citizens.The investors today are a lot more educated and have multiple sources of information,which was not available in the 70s and 80s. The market is very efficient in valuating companies and pricing them.Growth stocks are priced as they are today due to uncertainty of how you valuate a company that is growing at 100% per year and is suppose to even grow faster going forward so conventional valuations do not work for many cases.Many investors refuse to sell their stocks at current levels due to the fact that they are doing their own DD and have a clear Idea of what the company does,its future growth and revenues.If we are tlking about E commerce I completely agree with you,If we are talking about tech infrastructure companies then I completely disagree. The only danger to the current US economy is OIL prices.The Gulf Oil Producers can't afford to have oil trading in the mid teens for the first time in their history.I live in the Middle East and have a very good Idea on what is going on with Oil producing countries at the moment.

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