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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: Rock_nj who wrote (61816)5/4/2002 8:41:18 PM
From: Shack  Read Replies (2) of 99280
 
predicting a NAZ below 1,000. I don't see it going that low

Tell me Rock, I'm just curious. What valuation would YOU put on a company with flat to declining earnings whose numbers for the past few years have been inflated by pro-forma nonsense? You can even assume modest growth in earnings if you'd prefer. Then you'll get your rationale for Nasdaq 1000 (and the hard-core bears would argue its even overvalued at that level). It may or may not happen, but if it did I don't see it as an aberration. If CSCO actually hits their numbers next year, they are trading at 30x forward earnings. They are at 40x this years btw. You know what kind of growth they'd have to see for that to make sense? 10¢/quarter ain't gonna cut it.

As for tech spending, you said it yourself, Even now, tech spending continues.
What you see is what you get. The companies I talk to all say they don't have any plans to change their tech business spending, just another part of the budget now. The ramping up of technology within the greater economy in the late 90's was the aberration as were the bubble valuations. What are these alleged magical 'tech projects' you are hoping for?

Why will tech spending drop significantly from already depressed levels?

It doesn't have to. The stocks are pricing in double digit growth rates. Flat/modest growth spells much lower prices long-term, and if/when negative growth returns, watch out.
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