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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: Dale Baker who wrote (679)10/17/2001 4:56:53 PM
From: Zeev Hed  Read Replies (2) of 99280
 
Dale, there are two major (and man more minor) reasons why our friend is, IMTO, wrong for the next 3 or 4 quarters. The first is "It is the liquidity, stupid", and I have elaborated on that ad nauseum. The second is that valuation are not in vacuum, they relate to what other choice money has to get "decent returns". With Money funds now yielding a paltry 2.5%, a company having an internal rate of return of 3% (on equity, or a PE of 33.33333) and with no prospects of growth is better, many companies have internal rate of returns in the 6% to 8% with a growth rate of 5% to 15% and PE's well under 30.

Zeev
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