<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.> The Japanese and other computer companies will compete fiercely with Dell. This will certainly undermine both profits and revenues for all box makers. On the other hand, Intel will benefit from the increased competition. It results in lower prices for consumers and businesses, and, therefore, more sales. It also increases product selection, and bigger profits for Intel! Why do you think that Intel is helping Gateway into the server market? Intel is also getting into other businesses, making chips for appliances, cars, and supercomputers, for instance. On the other hand, Dell continues to manufacture commodities. Increased competition will undermine sales and profit growth for all box makers. I don't see how you can not believe that. It's common sense! The Japanese computers are really nice. They are definitely going to get market share. It may take time for them to ramp up, but it is inevitable that all box makers are going to have rough going over the next year.
<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.> With increased competition, why do you expect growth to be so good? What's more important, how can you know? The higher the p/e, the greater the risk and the less the potential for appreciation. This, too, is common sense.
<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.> As I said before, I have only puts, 5 contracts at $2 per share. I never short any stock! I have already resigned myself to the loss of $1,000. I don't like losing it, but it's not a big loss, and it will lower my taxes, so my real loss will only be about $700-$750. Before I ever started playing the market, I accepted the fact that I will win and lose. As long as I win more than I lose, then I am satisfied, and, now, I am way ahead of the game. And as I said before, I would never invest in a market that has already appreciated considerably so quickly, because the upside is severely limited, and the downside could be an abyss. If stocks just stay the same, then why invest? I'll just let my cash earn interest, and take advantage of the next correction. |
