Thanks Tom! You are a breath of fresh air--people on-line *hate* being disgreed with and I admire you 10 fold for your maturity!
I'll be brief:
>>2) When you say that my opinion is "wrong, inherently contradictory, and misleading", I think you are mischaracterizing my position. It is my opinion that PSFT's current price fairly reflects its future prospects, regardless of its admittedly high ratio to last year's earnings. That is not "wrong" or "contradictory", and I am not trying to mislead anybody. It's just my opinion. Take it or leave it as you like.<<
This was wrong for me to so harshly accuse you. My point, more reasonably made, is that the stock is at a scary valuation which is contrary to your opinion. I do not think *you* mean to mislead, but the concept of what I called "gestalt" valuation can be misleading (and wrong). We simply disagree here--but I must ask what you think will happen if the market corrects. Don't you think the lofty stocks--any of them--will fall harder, faster??
You do mention "future prospects" to which my answer is that that is *exactly* what p/e's and EPS's do--they value the stock based on *projected* prospects. It is safe to say that at any given time, a stock will be valuated 6mos to a year into the future. A p/e of 10 essentially assumes a 10 percent growth into the future. A p/e of 35-40 for stocks like ORCL is reasonable in that that is a realistic rate of future growth--albeit huge. For PSFT, they would need to grwoth 100% by next year!
>>3) >>A stock can't be "fairly valued" if you "look beyond the numbers on the income statement."<< I submit to you that you HAVE to look beyond the financial statements to fairly evaluate a company's worth. You have to ask questions such as the following: How do the company's products stand up to its competitors with regard to quality and price? How well is the company managed? What are their future plans for growth? What are their customers saying about their level of satisfaction? etc, etc. None of the answers to these questions can be found on the financial statements. This is not "gestalt" valuation. It is absolutely necessary to separate the longterm winners and losers. If we only looked at the income statement, all stocks would sell at the same PE! Now that's what I call "ludicrous".<<<
We simply disagree here--especially the last statement.
>>but I would not be surprised to gain another 2 to 4 times my money. :-| (Perfectly straight face.)<<
You (straight faced nonetheless) think that Dec 97 PSFT will be $180 (split adjusted) or even $360???
You should see me grinning. <g>
>>>> New investment into PSFT is HIGHLY RISKY << Yes, I do agree with you there. Just as an investment in any stock is risky.<<
But wait! That's not what I said. I did not say investment in ANY stock is risky, I said investment in PSFT is HIGHLY RISKY. True, there are risks in any investment, but surely you agree that some investments are more or less weighted in risk. Further, "high risk, high return" would speak reams to PSFT.
>>But shorting stocks is risky too,<<
Very true.
Good luck Tom! I am glad we have people like you here--brings solid balance and gives both perspectives!
What OTHER stocks do you like long?? You'll laugh, but I like ORCL!
GT |
