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Strategies & Market Trends : Value Investing

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To: LauA who wrote (14194)	3/29/2002 5:00:44 PM
From: Jurgis Bekepuris	Read Replies (1) of 78705

LauA, >Is there a ceiling? Is a very important question. When people realized that there is a ceiling for some technology companies, they got beaten down much more than MRK and co. are now. And I am not talking about dot bombs. I am talking about EMCs and CSCOs that had margins similar to pharmas in their heyday. If you looked at CSCOs ROE history, you would see that trouble started much earlier than 2000-2001 crash. It started with ROE dropping from 30s to 20s in 1997! If similar situation occurs to pharmas, only one shoe has dropped yet. Of course, pharmas will not have to write down $1B of inventory, nor they will have 40% drop in revenue (maybe?). However, they are still priced for ~30% ROE, which may be a good assumption or may be not. Jurgis - it may be different for pharmas...and I am somewhat long... but mostly waiting

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