SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : All About Sun Microsystems
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: The Ox who wrote (16660)5/27/1999 12:31:00 PM
From: Alok Sinha  Read Replies (2) of 64865
 
Here is my 2 cents on the current debate about SUN's valuation relative to the market.

First, let us not kid ourselves with respect to market valuation levels - by any measure the market valuations are stratospheric (even after this last round of sell-off), and should be cause for concern. IMO, if (and that is a big if) the market is overvalued by 30%, high beta stocks are probably overvalued by more than that. On the other hand, relative to the market levels (and tech stocks in particular) SUN is not very overvalued given its growth outlook and record of stable earnings.

Another bad inflation report will most likely knock the wind out of the high flying growth stocks as the Fed will definitely tighten. So irrespective of the fundamentals, that is the biggest concern. The 30 yr bond above 6% makes it very risky for stock for the near term - and that is not as outlandish as it seemed a month ago.

Don't get me wrong. I am long SUN (more than prudence would dictate) but cautious to the extent that I sell covered calls and buy puts whenever an irrational jump happens(like yesterday). In fact I have been loading up on a lot os stocks these past days, for the long term (but also buying puts to hedge the risk). What will prevent the bottom from falling out of companies like SUN is that they have assured investors of strong earnings for the next couple of quarters with about 20% rev growth - and that is what investors will pay a premium for.

Since the uptick in the long bond started 2 weeks ago, I started warning of a potential market meltdown. Even though it may sound illogical, the yield on the 10 yaer and 30 year bond have a direct effect on high growth, high PE stocks.

Regards

Alok
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News