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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 77.21+0.5%12:12 PM EST
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To: RetiredNow who wrote (67025)2/11/2005 8:18:35 AM
From: Dave  Read Replies (1) of 77400
 
Hey mindmeld,

I think there are two schools of thought regarding the market in general. The "Bull" school of thought is that during the low rate environment, companies were able to restructure their balance sheet (re-fi high interest debt with low interest debt), cut some bodies to increase efficiency. One thing that one pundit has noted is that CapEx is still low and if (or when) companies start to make these investments in infrastructure, one could see additional earnings acceleration. The increase in CapEx could also increase productivity which will help keep inflation in check.

On the other hand, the "Bear" case is that there is way too much debt in our economy at the gov't, corporate, and individual level. Debt has been fueling our growth and there are increased concerns that the consumer may be "tapped out". Moreover, while corporate profit margins are at or near their highs, this is a "bearish" signal and that profit margins will mean revert. While several managers on a "betting" on a decline, several managers are complaining that there is a lack of investment opportunities in the market since valuations aren't "cheap" based upon their DCF models.

That said, I've read that many believe that Large Cap growth looks cheap on a "relative" basis. Since everyone is a "Value Investor" these days (Value defined as low P/B ratios), Large Cap Growth when compared to Value looks cheap as their argument goes.

Dave
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