Kevin,
while I think your logic is sound, it may be outdated. You can apply your analysis to all the leaders such as MSFT, DELL, CSCO, INTC and come up with the same conclusion. They are all over priced.
The investment world might have entered a new paradigm. The major change is the disappearance of the old individual investor. They have gone either online or have shifted toward mutual funds. They could also simply be so outnumbered that they are no longer a driving force in the market.
The online investor over reacts with lightning speed today, creating over bought and over sold conditions. The number of mutual funds exceed individual stocks. This create a huge pool of "other peoples' money", managed by individuals whose objectives are quite different if the money were their own. Just like real estate with the frenzy buying by real estate investment trusts, there is no way that I will buy at the same prices as these managers, with OPM. Do you think Magellan gives a hoot about which stock to invest in? Their focus is how big the funds are and therefore the fees.
Money flow and liquidity will drive the market much more so than in the past. Fundamental analysis, while still useful, has little to do with actual stock prices going forward. Even TA, has to take into account this new paradigm.
I opine that this is a bubble that will burst. Unfortunately, I don't have the date yet. Like the Japanese bubble, it could go on for years before it bursts.
Just my 2 cents.
Ramsey
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