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Strategies & Market Trends : Buffettology
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To: jhg_in_kc who wrote (2761)1/30/2001 1:13:58 AM
From: James Clarke  Read Replies (2) of 4690
 
The reason I bought Dell in the teens is the same reason I didn't in the 50s. Valuation. I might be interested in EMC too at about 25. The lesson of the last year is that valuation matters. EMC at 100 times trailing earnings looks incredibly dangerous. YHOO might make sense at this price, but I just can't figure out how to value the thing so I pass.

Dell didn't drop 60% because its long-term prospects deteriorated - it dropped 60% because it was overvalued. Its long term prospects have not changed, though Wall Street's perception of them certainly has. Sure, Dell is now not going to grow 30% indefinitely...but it was NEVER going to grow 30% indefinitely.
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