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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: Alok Sinha who wrote (29774)	3/31/2000 11:14:00 AM
From: Tony Viola	Read Replies (1) \| Respond to of 64865

Alok, >You are being naive if you start believing companies (however great they are - SUN CSCO, etc), can justify trading at 100+ PE when their growth rate is 30-40%. The main reason the PEs of firms such as SUN, CSCO, INTC, TXN, AMAT, NOK has expanded to such levels... At the risk of nitpicking, all of those companies don't have a PE of 100+, even trailing. In fact, the only two that do are SUNW and CSCO. Signed, Data Freak

To: Alok Sinha who wrote (29774)	3/31/2000 12:34:00 PM
From: Prognosticator	Respond to of 64865

Alok: I don't think I'm being naive: to me the high PE ratio simply means that quite a bit of future growth has been factored in to the stock price. In the case of SUNW and CSCO those companies have such a dominant position in the space they play in that they deserve the high valuations they have been given. Any falter in the execution of those companies will result in their stock price taking a hammering, and rightly so, but IMHO this week's action has been driven by the nervousness of traders, not investors. But you're right: one downside to the high PE ratios is increased volatility, and I have found it cheaper to ride that out rather than purchasing options as insurance. The last week has been pretty rough on the old portfolio though. P.