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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Uncle Frank who wrote ()6/3/2000 2:53:00 AM
From: Seeker of Truth  Read Replies (3) of 54805
 
We're all happy we didn't sell our gorillas and kings during the recent slump. OTOH many people expressed the wish that they had sold when things were "too" high. Warren Buffett says that the short term in the market is unpredictable and anyone who has a system for making such predictions shouldn't be allowed to talk to children. So I am not talking about timing the market, which in my own limited experience(45 or so years) has never been possible. I raise the question --- are there FUNDAMENTAL criteria for making the statement "stock X is too high to buy at the current price." Or too high to keep? The two statements are only equivalent if the account is not taxed. I decided to compile some data which may or may not be useful in this decision. I have no opinion yet and earnestly seek the ideas of the many who have superior wisdom to mine.
These data are the price/earnings ratio of the estimated year 2005 earnings. The estimates are constructed by taking Yahoo!Finance's five year estimated growth rate. I'm not fooling myself into thinking that the connection with reality will be close. The question is, are these numbers of any value at all? (I have rounded off the decimal points and the definition of 2005 varies because the fiscal years don't all end in December.)
CSCO 31
EMC 23
GMST 21
INTC 18
ITWO 56
JDSU 40
NTAP 30
ORCL 40
QCOM 14
SEBL 31
The average is 30.4. QCOM looks like a great buy. But I'm by no means sure that ITWO is something to avoid or sell. Any ideas?
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