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Technology Stocks : Applied Micro Circuits Corp (AMCC) -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (346)	2/10/2000 8:25:00 PM
From: Guy Gordon	Read Replies (1) \| Respond to of 1805

I'm getting a nose-bleed. :-) RE The New Economy: I've posted this elsewhere. I think the talking heads on TV are missing something. (There's a shock!) Year after year, they tell people to invest long-term. Why should it surprise them then, when people start paying up for two or three years worth of earnings? They keep complaining that XYZ Corp is selling at x times next year's earnings. But what investors are saying is "I'm not selling this stock this year or next. I expect it to keep growing. I'm looking two-three years out." I hope these people aren't fooling themselves. Because if they panic and sell in a correction they are in big trouble.

To: MulhollandDrive who wrote (346)	2/11/2000 10:21:00 AM
From: Trader Dave	Read Replies (3) \| Respond to of 1805

BP, I don't know yet if amcc is 2 to 3 years ahead, probably not. But even if it's one year ahead, it could see an 80% compression from here and still be "fairly valued" whatever that means. The nice thing about owning stocks if you don't have to make a rash decision and you can sell part of the position. If we sell at all it will only be a portion. There's probably a good discussion developing on this thread that could be applied to deciding how to value extraordinarily high growth rates. If they are sustainable, paying a very high pe on forward one year earnings makes some sense. If 30% is sustainable for 5 years (cisco) and 60% is sustainable for 5 (amcc) years and you use a higher discount rate due to the "risks" of the higher grower, I'd still bet you'd pay more than twice the pe to growth rate ratio for the higher grower. I have to sit down and pencil out a discounted earnings flow to see. TD