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Technology Stocks : Xilinx (XLNX)

XLNX 194.92

0.0%

Feb 14 4:00 PM EST

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To: Charlie Smith who wrote (2319)	5/3/1999 1:20:00 PM
From: Lucinos	Read Replies (1) of 3291

I am not talking about the inflation of common goods and living standard which has been low in the last few years. The term "inflation" I am using may be confusing to you. However it is a very common concept for economists. If you regard the stocks as one kind of merchandise, due to the high demand and fix supply of good stocks in the stock market, the price of stocks with strong growth potential is keeping on going up in the last four years. Due to this demand supply mechanism, the historical PE for companies like XLNX was below 30 in the early 90's. However, it is around 50 to 60 for a few months now. It seems to me that people is gradually used to this high PE ratios as long as the bull market is still existing. The same arguments of the inflation of stock prices may well apply to internet stocks with relatively high PE ratios. As you can see, I am not talking about the inflation of traditional goods. It is the inflation of stock price that I was trying to relate to. Lucinos

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