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Technology Stocks : TAVA Technologies (TAVA-NASDAQ)
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To: Douglas Rushkoff who wrote (7118)12/11/1997 9:58:00 AM
From: Skeptic  Read Replies (3) of 31646
 
Two years of high earnings that will definitely end don't justify a 20-30 p/e.

Exactly. This is the trap in Y2K investing. A lot of people are looking at very high current growth and using P/E-to-growth analysis to assign very high P/Es to these stocks. That's only valid if the growth is expected to continue for many years. That's clearly not the case with Y2K.

The second point is that roughly half the value of the stock depends on what they are earning and how fast they are growing when Y2K is no longer an issue. I used a 15% perpetual growth rate which is very generous. Not many companies can sustain 15%+ growth for more than a few years.
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