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Technology Stocks : SAP A.G.
SAP 253.28-0.4%Nov 12 3:59 PM EST
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To: Jay8088 who wrote (2435)9/2/1998 11:55:00 AM
From: Sam Citron  Read Replies (1) of 3424
 
Jay,

I think your post is very well reasoned. Holding stocks with PEs nearing triple digits is rather dangerous even in the best of times. At the present time, with unprecedented deflationary pressures and most areas of the globe in recession or worse, it seems especially reckless to do so.

Investors had until very recently espoused a dualistic approach to investments, assuming that the nifty fifty could avoid the massacre that the rest of the market has been experiencing. Perceived "quality stocks" are always the last to crumble. But they do in the end tend to succumb to the same winds that rattle the sails of the smaller boats. They may not capsize, but they are certainly affected by the storm. The strongest, with good balance sheets to protect them, even tend to be strengthened by such events, as they are given the opportunity to plunder the talent and intellectual capital of their less fortunate competitors at fire-sale prices. But it is still far too early in the liquidation cycle for that right now.

SAP is a very fine company that dominates the fast growing enterprise software sector. But it will not be immune to the slump as companies are forced to cut back on the growth rate of their IT budgets.

SC
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