>>CSCO happens to be a wonderful company. However, in order to invest in it or DELL, or many of these other highly valued companies at these levels you have to assume that P/E expansions will continue indefinitely.
The former is by acclamation while the later is demonstrably false. If Cisco merely maintains its PE and increases earnings by 20-30%/yr it is axiomatic that Cisco will rise in value accordingly. I can live with a 25-30% annual return after such heady years.
>>I agree with Jach that CSCO will revert to its historical PE, (also known as "reversion to the mean" in statistics) which means it will fall at least 50% or it will still be at this price a couple of years from now.
You may want to look at a history of blue chips like JNJ, MRK and others in the last secular bear market of 1973-74. If you believe bear markets have disappeared, the best case scenario is no price increase for a couple of years.
Should one occur, Cisco will survive a bear market better than most others since its market shall continue to outgrow most others. Actually a bear market may enhance Cisco's allure as people seek quality with growth. Then there is the massive demographic power of the investor class that has yet to peak, much less enter decline. That argues most strongly against any enduring bear market.
>>BTW, if CSCO goes through its 50 day moving average, 95, for at least a few days, the institutions will start dumping it and at that point the decline will start
feeding upon itself.
You are wrong again, as you obviously have no background in the business.
>>You're right. Stock prices reflect recent market performance, also known as "momentum". Unfortunately, prices usually go to extremes in both directions. They've had their extremes on the upside. I expect the downside to be just as extreme.
Wrong again. Cisco's stock price reflects its outstanding performance as a company and the expectancy that it shall continue to build on that outstanding success. Should Cisco falter in a material way, then Jach and you would be right in the consequence after having been so wrong in the analysis.
However, the market and its best say you are both wrong and shall continue to be so, about that I am most sanguine. |
