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Strategies & Market Trends : Buffettology

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To: James Clarke who wrote (985)	1/11/1999 1:03:00 PM
From: jhg_in_kc	Read Replies (2) of 4691

James, I actually DID learn quite a bit about Buffettolgy in our gorilla hunt exchange. i was hoist on my own petard. Re: valuation. The current issue of Money magazine says in re Dell(but this could be any stock for the purpose of this discussion) it says: "You pay a little less than twice the pe multiple of the S&p 500 but get just over 5 times the projected earnings growth rate." What's wrong with that? Pay 2x the PE to get 5X the growth rate (30 v. 6% per annum.) Shouldnt a growth stock's p.e. be above the average of the s&p by the very fact that it is a growth stock. It would be abnormal if it wasn't. then again maybe that abnormal situation is what you and buffet are looking for. but this is not the 70s: the proliferation of information on the internet and dozens of financial tv shows works against these bargains going unrecognized for long. what say you? jhg

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