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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Uncle Frank who wrote (1804)	5/8/1999 8:00:00 PM
From: JRH	Read Replies (2) of 54805

Chuzzlewitt published a fair valuation for csco, dell, etc. a week ago. I think he pegged the fair value at 120+. Yes, if I recall, he was pegging the fair value of CSCO given the value of the S&P 500. According to Yahoo, the S&P 500 is at a PEG ratio of nearly 6 and a trailing PE of nearly 30, which is higher than it ever has been. Now, granted that this market has been hitting new highs for what, the last 10 years? So, it inevitably could keep going. But lets be honest with ourselves: do you really think that a PE of 30 is justified for the WHOLE MARKET when it has a 5 year growth rate estimate of 7%? I don't know about the rest of you, but my hat is tipping towards an at least 20% correction. Maybe it is just wishful thinking though ;) . Don't get me wrong Frank, I love my CSCO stock. For the past two and a half years it has treated me well. But I still think it is tremendously overvalued. I think a "fair" PE would be around 60% (approximately 2 times growth rate). I don't have the numbers to back it up, JMO. Comments? BWDIK.... Justin, the young (foolish? naive?) whippersnapper <g>

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