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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: KyrosL who wrote (51448)	5/21/2000 7:43:00 AM
From: shamsaee	Read Replies (2) \| Respond to of 99985

<For example, throughout the 1970's and 1980's a good rule of thumb for valuing stocks was that the growth rate of a stock be equal to its P/E ratio. Today, leading tech stocks are sporting P/Es that are two or three times their growth rates -- even after the recent fall in the NASDAQ. It seems to me that they have very far to fall to return to normal valuations relative to other stocks, and even further, if they become relatively undervalued, as often happens in bear markets.> The 70 and 80 were completely different than today and completely different economic circumstances with the Japanese eating US corp profits for lunch.As long as US corp are the leader and innovators of new technology, more money will keep flowing into tech stocks by even a greater number of Foreigners and US citizens.The investors today are a lot more educated and have multiple sources of information,which was not available in the 70s and 80s. The market is very efficient in valuating companies and pricing them.Growth stocks are priced as they are today due to uncertainty of how you valuate a company that is growing at 100% per year and is suppose to even grow faster going forward so conventional valuations do not work for many cases.Many investors refuse to sell their stocks at current levels due to the fact that they are doing their own DD and have a clear Idea of what the company does,its future growth and revenues.If we are tlking about E commerce I completely agree with you,If we are talking about tech infrastructure companies then I completely disagree. The only danger to the current US economy is OIL prices.The Gulf Oil Producers can't afford to have oil trading in the mid teens for the first time in their history.I live in the Middle East and have a very good Idea on what is going on with Oil producing countries at the moment.

To: KyrosL who wrote (51448)	5/21/2000 9:15:00 AM
From: RocketMan	Respond to of 99985

During the years following a peak, valuation differences between growth stocks and other stocks diminish considerably. Here are some figures on growth leaders from 73-74, when the Dow was off 45%, to support your observation. These were from a Street Smart article: Company High Low Decline Sony 18 4 -75% Xerox 170 46 -73% IBM 91 37 -59% CDC 173 10 -94% Ampex 50 2 -96%

To: KyrosL who wrote (51448)	5/21/2000 11:19:00 AM
From: Techplayer	Read Replies (1) \| Respond to of 99985

Kyros, I totally agree with you on valuations. Many of the large caps on the Nasdaq still trade at extreme multiples. Mr. Fun pointed out on the CSCO thread the other day that in 1998, CSCO traded at about 1/2 of its present fiscal year multiple and even last year was at 75% of present levels. The question is, will there be an oversold condition or absolute correction in valuations created in an election year? Gore has no platform if he can not point to the wealth effect. He will not be able to cite that creating change will disrupt a good thing. Along that line, it really did not make sense that Clinton's own people supposedly forced Greenspan to raise rates more than his customary 1/4, as was reported this weekend. My bet, and perhaps a costly one, has been to pour money recently into beaten techs that are trading at PEGs of less than 1 times 2001 estimates. That has not included any of the large caps (with the exception of a few CSCO shares at 52.75). Of course, seasonality will play an effect on the techs as well since this period is usually the weakest for the sector. If we break the support lines, I will just dump out and wait, like the rest of the money out there right now. thanks for your opinions. tp