I find it somewhat ironic that people are quoting Warren Buffet in trying to cope with the decline in high-PE stocks.
IMO, provided that they execute, Broadcom, JDS Uniphase, Applied Micro, Cree and PMC-Sierra all appear to be trading at 10-15x their 2003 earnings. Juniper and Sycamore might be trading at 15-20x 2003 earnings, Vignette and Qualcomm at 20-25x, and Siebel and Network Appliance at 25-30x. As for Sandisk and Rambus, let's not even go there :-). Unless we enter into a recession, I think it's highly unlikely that these companies will be trading at such low multiples in three years, given the high levels of growth that they're showing.
Given the circumstances, Buffett's comment about looking at the market as a store with a manic-depressive owner, not to mention his line about being greedy when others are fearful, both seem to be highly relavant at this moment, even if Buffett himself wouldn't concur with their usage in this particular setting.
Eric |
