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Technology Stocks : All About Sun Microsystems

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To: Stormweaver who wrote (16121)	5/3/1999 6:24:00 PM
From: Alok Sinha	Read Replies (2) of 64865

For once, couldn't agree with you more. There was an interesting comparison of P/Es of tech firms such as MSFT , CSCO with industrial / cyclical firms such as ALCOA, International Paper on Wall Street Week. I was shocked by how high the PEs of some of these well known cyclicals has gotten to during the last 1500 points run-up in the Dow. A number of them have training PEs of 80+. With growth rates on average that of the economy, and zero pricing power I wondor what is driving the rush into cyclicals at these levels. (Besides herd investment mentality of course). This type of froth scares me far more than narrow tech leadership or Internet only market. You may afford to overpay for a Mercedes (AOL, MSFT, etc) in a bid to buy into quality, but once you start buying Yugos (the cyclicals) at premium I think you are really in trouble. Apologies for the crude analogy to cyclical investors who are prospering in the recent run-up. Regards Alok

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