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Technology Stocks : Winstar Comm. (WCII)
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To: Mark Sherry who wrote (9906)1/6/1999 1:17:00 AM
From: Bernard Levy  Read Replies (1) of 12468
 
When the PEs of MSFT and CSCO were high 4 or 5 years ago, these 2
companies were still relatively small, and had a lot of untapped
markets. The opportunities for new markets are not as significant
now. Also, keep in mind that with the discount factor for future
earnings, future income beyond 10 years is worth very little.

MSFT and CSCO are not alone. IBM is given a huge PE even though
it is growing at only 6% per year. Big cap computer companies have
now totally exorbitant valuations. This creates an extremely
dangerous situation in case of bad surprises. Also, when
the Internet bubble will explode, it will take tech stocks
down with it, since the general public still views these stocks
as part of the tech sector (not to mention margin calls
for Internet stock investors forcing them to sell other
stock holdings).
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