Semi-Equips - Buy when BLOOD is running in the streets! Message Board

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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!

LRCX 159.74

+1.0%

Dec 3 3:59 PM EST

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To: goldsnow who wrote (6693)	8/17/1998 12:49:00 PM
From: Robert Douglas	Read Replies (2) of 10921

OT Abby Joseph Cohen comments. Goldman Sachs & Co. investment strategist Abby Joseph Cohen has said for the past two weeks that investors are overreacting, and that profits will keep growing enough to support higher stock prices. That is the rub! Will profits grow fast enough to support higher stock prices? The way I see it, for profits to grow you have to have higher revenues or earn more for each dollar of revenue. (profit margin) Since top-line growth alone is doubtful to "support higher stock prices" by itself, it falls upon higher profit margins to produce this bottom line growth. Profit margins as reported by the Bureau of Economic Analysis, bea.doc.gov, are at a 30 year high and have risen each of the last six years. Does that sound like a trend that is likely to continue given the present environment? And what if, heaven forbid, profits actually declined? <g> Can you imagine the shock to investors who seem to think of double digit profit gains as some sort of constitutional right? Profit margins can't go up forever, and IMO are already at unsustainable highs. I think it is reckless for bright, well regarded market strategists to assume that profit margin growth can continue at the rates of the recent past. One final thought. What would be the result of a change of heart by our much heralded market maven, Ms. Cohen? How big a drop would a sell signal from her generate? (Does anyone remember the Joe Granville selloff, which was unprecedented at the time?) I think it would be enormous, probably enough to put on the back burners any public offering by her firm. Do you suppose the partners of her firm have mentioned this matter to her? Nah, I must be getting jaded in my middle years. -Robert

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