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Strategies & Market Trends : Stock Attack II - A Complete Analysis
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To: DukeCrow who wrote (2188)3/7/2001 11:33:53 AM
From: Paul Shread  Read Replies (1) of 52237
 
Many thanks, Ali. Sounds like the NDX and COMPX still have substantially higher valuations than they did at the bottom in October 1998. The COMPX is up about 63% off its Oct. 1998 low, and the NDX up about 87%; would be interesting to know how much the earnings of the top 10 or so weighted companies at that time have grown since then. (Not trying to give you more work to do, but thanks for the good research.)

The NDX is loaded with companies that are just coming into profitability (I guess that's what differentiates them from the unprofitable COMPX stocks -g-). ARBA, JNPR, ITWO, BRCM, PMCS are just a few that come to mind. Once upon a time, no one would take a company public until it had three profitable quarters behind it. There are a whole host of NDX companies that are only getting to 2-3 profitable quarters now, and they've been publicly traded for some time. Not sure how much the increased profitability of those companies will help the NDX's PE down the road -- or whether they will even continue to achieve increased profitability. The market craze of 1999-2000 essentially made the public markets VCs -- a role and risk level they are entirely unsuitable for. VCs can have 39 companies in a portfolio fail if the 40th is JNPR; the public markets cannot function that way. The implication of an IPO used to be that a company had already gone through a weeding out process; hopefully the public markets will get back to that role, and are probably already well on their way. JMHO...
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