How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 476.08

0.0%

Dec 17 3:59 PM EST

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To: TideGlider who wrote (60834)	8/26/2001 3:06:30 PM
From: Dave	Read Replies (2) of 74651

are you accounting for expansion of the economy and inflation. Doesn't each have an impact on such a comparison? Would it still be much higher with those considerations? Are you speaking of the PEs of the 500? Well, in 89 when Greenspan was chirping about irrational exuberance, the S&P 500 was at around 325. Now it's at 1162. Since your chart shows that in 89 CPI averaged about 123, and is now around 177, if I'm doing the adjustment for inflation correctly, that means that the S&P 500 is about 150% more expensive than in 89, AFTER adjusting for inflation. I don't have the P/E figures for 1989 handy. Do you have that? While the extreme price of the Nasdaq (which is still high; remember that in aggregate the Nasdaq 100 is not even profitable!) has garnered all of the attention, the other indices are dramatically overvalued as well, and have barely begun to decline. In my opinion that is partly because of sector rotation: as investors have sold off their tech stocks, many have bought low-tech companies that they consider safer. They may be surprised at just how safe these stocks aren't. Dave

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