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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Dan Spillane who wrote (933)	11/25/2000 5:36:31 AM
From: TobagoJack	Read Replies (2) \| Respond to of 74559

Hi Dan, I am definitely not deliberately picking on you. Just feel as strongly as you do about the same topic. The abnormal growth rates you speak of were, are, but will no longer be fueled by availability of unprecedented liquidity, information flow, growth of same liquidity/information and then justifiably underpinned by the fateful belief in a one-way bet. At the peak, the growth rate of the canals, railroads, and tulips were correctly valued, but only at that very fleeting moment in time, before time moved on. Using abnormal and unsustainable growth rate expectation for valuation gives false comfort. Many evidence now indicates that when companies merely meet their growth expectation, their value gets pulverized, and when they fail to meet same, gets destroyed. In a world free of debt, what you say would be absolutely correct, in that PEG is stable. With debt, the math of loss changes substantially. PEG methodology is an invention of the same bunch that gave the world the Boston Chicken, and soon the Bostonian went gasping on its own nitrox bubbles, ever euphoric. What happens on the coming day when a large publicly listed company goes bankrupt? What will CNBC be talking about to all that would listen (including just about the whole world, given vast improvements in tech since Oct 1987 and even LTCM)? As the broader environment continue to deteriorate, grinding down the can-do spirit of the many, and as bids fail to materialize for the truly over-valued equities and under the water bonds, their correctly valued neighbors will get sold off just because they still can be sold. 12 months from now, YHOO, AOL, CSCO, JDSU, EMC, NTAP, C, GS, LEH, MDW and even MSFT will all be lower than they are today, and many techies will join the bankers in the pubs, thinking back on that sweet moment when the PEG was mathmatically correct, though the G started to change. The relatively small biotechs (by revenue and profit measures) and handheld/notebook PC plays will not be able to stand in the way of the mass exodus for the fire escape of their bigger network, optical, and financial siblings. The weight of the market and money is not in their favor. This year's show is just an appetizer for the unthinkable ... the high profile blowup of one from amongst ICGE, CMRC, OPWV, or AMZN. Chugs, Jay

To: Dan Spillane who wrote (933)	11/25/2000 9:11:22 AM
From: Tommaso	Respond to of 74559

You didn't mention any specific stocks (or work out the ratios that you recommend) so I'll do it for you. IOM, AAPL, and perhaps soon AMAT are beginning to look attractive and I would buy them if it were not for the general economic threats of a disastrous trade imabalnce, an overvalued dollar, a negative savings rate, and a huge debt burden in the United States. Also, far too many other NASDAQ 100 stocks remain overvalued, and we are in the middle of a bear market that can eventually carry everything a good bit lower. I see no reason to lose money just to keep you happy. <g>

To: Dan Spillane who wrote (933)	11/25/2000 10:02:35 AM
From: tradermike_1999	Read Replies (3) \| Respond to of 74559

One needs to only look at the PEG ratios on various high tech and other stocks to see they are undervalued (i.e., trading at fractions of the growth rate). However, last spring they were overvalued on this same basis. Further, some companies are experiencing accelerating growth and improved prospects, particularly those related to notebook and handheld PCs (triple-digit), and biotech. Actually growth is topping out in many tech sectors, along with the slowing economy. PC demand is down and PC prices are dropping. Semiconductor demand is expected to fall over 50% next year. And as for the hand held PC companies, PALM, HAND, RIMM - I wrote an article suggesting them as short sales last weekend. All have wild PE rations up in the hundreds. RIMM's is over 1,000. So to think these are compelling buys in this market is a wild gamble.