Yes, that is a very basic question: did the bubble begin in 1995, or not till the end of 1998? Whether you use the charts and draw trendlines, or use average PEs, P/S, P/CF, etc., you have to decide when we left the normal range. If you think that only 1999 and 2000 were "outlying data points", to be ignored, then we have now about given that back, and it's time to go long tech again. OTOH, if you are going to throw out everything that's happened since 1995, then we've still got a ways to go (on the downside).
I don't know the answer to that question, so I'm just evaluating each company on its own merits. When I can get a stock at a PEG of around 1 (guessing forward 12M EPS and LT growth rate), then I'll consider buying it. The main problem with my method is that forward 12M EPS have been (and continue to be) ratcheted down severely. 6 months ago, TXN was supposed to make 1.50 in 2001. Now? maybe half that. |
