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Pastimes : Home on the range where the buffalo roam
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To: Boplicity who wrote (11646)3/16/2001 10:04:53 PM
From: Sig  Read Replies (2) of 13572
 
Greg:
The realistic bottom for a stock will have to be determined more by the P/E than by a low value for the NAS
or Dow. When the CEO's cannot even tell us what sales or earnings will be 3 months hence, or even what they will be building 5 years from now, then a PE requiring 50 years to earn the market cap is ridiculous.
Csco and Intc P/E will perhaps double now, becoming a huge risk in comparison to owning bonds.
The only thing that may hold the price up is confidence in management to meet all challenges and our own confidence the product will be needed and the price reasonable enough to sell it.
If one assumed that a large company like csco,intc,msft could make 20% a year for the shareholders(
growth may have to be double that, since shareholders would be lucky to get 1/2 the benefits)
Then Csco should be at 18 and is now at 20
Msft should be at 29 and is at 55
Intc should be at 19 and is at 28
Let Dell grow at 40%, it should be at 18 and is at 24
So these are the most valued of the Nas, if they can continue to grow at 20% and there is no recession, the prices are not out-of-line.
If the NAS itself had grown at 12% a year since 1996, it would now be at 1638 which would have provided outstanding returns.
The Dow would be at 7248
Conclusions:
1. There was a bubble
2. It too sad to think about it.
Sig
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