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Technology Stocks : Wind River going up, up, up!
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To: Mark Brophy who wrote (1284)6/11/1997 11:50:00 AM
From: Allen Benn   of 10309
 
>If you carry the NPV out to all future years, just about any stock
>looks underpriced! So, Allen's use of the NPV far into the future
>such as the year 2011 is invalid.

Mark, please re-read my posting on valuation, which you frequently quote. I think you will find that a major concern I wrestled with is how to do these calculations in a robust fashion. So please don't be quite so flip in labeling my calculations invalid.

What surprises me is that, with all your spreadsheet calculations, this problem has just occurred to you. Why do you think I have said so many times that just about any growth stock is inexpensive if it continues to achieve high growth? The problem is not so much in valuing growth stocks; by far and away, the primary problem is in identifying them correctly beforehand.

I suggest you re-read all these valuation arguments, and then explore their implications on your computer. I think you will find that if WIND progresses anywhere near what many of us believe is certain, then the stock is cheap when you compare today's price with any reasonable expectation for its future price.

I would also like to suggest that whatever conclusion you arrive at that you keep the details hidden. If you have reasons to believe WIND will grow earnings more or less than analysts or other contributors think, we would love to hear them. If you have reasons why WIND is going to under-perform drastically, then by all means tell us. But please don't tell us anything more about analytical eye-openers that are well-known to any analyst in the business.

On my part, I will try to refrain from making any more silly one-liners.

Allen
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