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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: Uncle Frank who wrote (42219)	11/4/2000 5:03:03 PM
From: Ed Forrest	Read Replies (1) \| Respond to of 77399

even Mullineaux is making bullish sounds UF When Greg does that then indeed things are looking up.:) Cheers Ed

To: Uncle Frank who wrote (42219)	11/4/2000 6:44:45 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 77399

UF, >> That approach makes sense if a stock price is increasing year after year at 20%, 40%, 80%, whatever... You've just described Silverback Cisco. Yep. It and other "horsemen" type stocks like INTC and MSFT were steady gainers throughout the 90s. My point was that this type of steady-growth trend gave way to more-explosive action in the past couple years. QCOM is the poster child of that explosive growth, but there have been plenty of others--JDSU, SNDK, JNPR, SDLI, and so on. Take JNPR (please)--with a 68BB market cap, it has a trailing PE of 840 (I'm sure it's higher when you use include options). How long after going public did it take for Cisco to get a 68BB market cap, and what was its trailing PE? Did Cisco's prospects at the time seem dimmer than JNPR's now? Prolly not. You could make similar comparisons of any number of older tech names compared to the Young Turks. I believe this rapid increase in stock price occurs not just because investors are crazy and not just because the "fundamentals are great", but also because everybody wants to get the next Cisco, Intel, EMC, whatever. OK, so enough people have read the Gorilla Game, or not even that--just seen all the wealth built up by the old leaders, so they pile on quickly on new leaders. Perhaps the old leaders were underpriced early on, or perhaps the new leaders are overpriced, or perhaps some of both. I tend to think it is the latter. At the same time, ironically, the enormous valuations afforded to the hot new stocks means the old ones that are still kickin a can trade at high valuations as well. Hence Cisco can have a much higher PE now than when it was smaller and didn't have to worry so much about large numbers. The market seems to allow that scenario unless the growth starts to fade, and we've seen what happens to Dell,MSFT, INTC when that becomes a concern. Don't think Cisco has any immunity besides continuing to grow at an astounding rate. I don't know how all this will turn out, but I do think the risks are higher than in the past. The nasdaq's bear phase didn't begin until the end of March and it appears that it is largely over at this point; even Mullineaux is making bullish sounds <lol>. So many of your comments relate to a 7 month trend. I know that it's seemed like forever It is a good time of year, to be sure. I'm really more concerned about the trends that have been happening over a period of years. Like I said, I think it would be great for a nice bull market to continue since that's the easiest way to make money. I won't spite my pocketbook just to win an argument. But I just have more of a sense of caution now. I have never been an investor through a bear market in this country, but I have watched what has happened in Japan. I lived there back in the bubbly days of the late 80s, and those were heady times. But now the market has gone nowhere there for so long, many people think stocks are like gambling. I know people in their early thirties whose entire "portfolio" consists of 100K in a postal savings acct. yielding 1%. If young people did that here, they'd be told they're crazy. Now that Merril Lynch et al have moved into Japan in a big way, perhaps they will get the young people hooked on our stock religion. But it will be a long time before "stock investing as a way of life" will permeate their culture as it does ours (I think an excellent metaphor for this is that CNBC ad which shows regular people walking around or eating or whatever, with the CNBC stock ticker streaming across their chests. I'm sorry, that seems kinda weird, but also probably more brutally honest than the creators intended!) Good luck with the Cisco numbers Monday. I will pay attention to their forward guidance, as well as inventory/DSO and other cash flows for indications about the health of their customers.