Semi Equipment Analysis Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Semi Equipment Analysis

SOXX 309.40

+1.0%

4:00 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Return to Sender who wrote (6375)	10/22/2002 9:42:05 AM
From: Kirk ©	Read Replies (1) of 95526

1974--The S&P sold at 7.5 times earnings while yielding 5.1% 1980--The S&P sold at 6.8 times earnings while yielding 5.7% But how do we explain the P/E ratio. I am afraid that it is still too high but I am sure I could be wrong again. I don't know what the market will do in the short term, but over 2o years, it should outperform most other investments. A buddy and I've been comparing calif real estate with the Market from the 1970's through today and they follow pretty closely in total return. Efficient market? Anyway, the variable lacking from your P/E analysis is inflation. The Fed Funds rate is an attempt to represent this. If hard assets like Gold or real estate are inflating at 17% a year, why would I want to invest in a company that is growing by 10 or 15% and ties up depreciating assets while doing so? There IS NO REASON until you think Gold or whatever has peaked out and this doesn't happen until inflation dies. That company in times of high inflation, to compete with hard assets, has to increase the dividend rate to compete for capital. I think it all works out in the cost of capital. Anyone have a chart showing the cost of capital? I know that when I was working at Agilent/HPQ that when we had a new R&D idea we had to show a return better than the cost of capital which was 15%. Once that hurdle was met, ideas were then ranked on risk vs their return. The majority of the risk was in how long it took and how much total capital consumed before the project paid for itself. We even had a metric BET for Break Even Time. Anyway, any talk of P/E without inflation is just moving air. Kirk

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next