William, after thinking about the Intel question (which has been posed on this thread before), I think I have a different opinion. First of all, Intel sells a component that makes up every computer. Well, so do a lot of companies. Take Seagate for instance, who makes most hard drives. Or take microsoft. They make the OS that runs most computers.
I guess all that is fairly irrelevant. What matters is Intel's growth compared with DELL's growth. If interpret it correctly, what you think is that Intel's growth will be equal the growth of the PC industry as a whole. This obviously is correct. However, for DELL to have roughly the same P/E ratio as Intel, it would have to also grow at the same rate a the pc industry. This is not happening! Dell is outpacing other companies. The shift to direct marketers will cause DELL and GATE to grow at a much faster rate than the industry. This is why it is not good judgement to say that DELL does not deserve a higher p/e than Intel.
In reference to another of your comments about this price rise being based on euphoria and not fundamentals, I also disagree. There was definitely not a general feeling of euphoria, as the market finished down overall for the week. I would also like to think it was based on fundamentals. Because the expected growth is expected to be so good, I would expect a rapid p/e expansion to account for that, like what we are seeing.
And now we go to the subject of Mr. Greenspan. You must realize that the reason he made those comments may be different from what they appear. He was not just trying to be a good semaritan and warn us sheep headed for the slaughter house. He is rather worried about recession, and thought he could ease the markets down to prevent that from happening in a few years.
BTW, have you covered your short yet? I suggest you do so now, so you can reinvest it instead of losing even more money hoping DELL will go down. Face it, it's not happening.
-Brian |
