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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Mike Buckley who wrote (36175)	12/7/2000 9:00:08 PM
From: John Stichnoth	Read Replies (1) \| Respond to of 54805

if one of them has a lot lower PEG than the other -- I realize that that's a lot of "ifs" -- then the one with the lower PEG needs to be looked at closely as possibly the stock with the most compelling value. I agree, even if you do have too many "ifs". (You're sounding like one of the lawyers constructing their hypotheticals down in Florida). But, you don't contradict my original contention, that you can't set arbitrary 1.2, or 1.0 levels to look to get out of or into stocks (plural). At the least, the PEG targets should be set individually, by stock. The PEG for two companies should be different for two companies with equal projected growth rates, depending on other factors, such as "sustainable competitive advantages and market opportunities". btw, don't misunderstand me. PEG is one of the most important, easy indicators I look at. But, PEG doesn't capture the CAP of a stock. For me it is a mechanical means to determine how things are going. As the PEG gets too extended, relative to its historical levels and vis-a-vis any changes in growth rates or stability, it should be a signal to look at selling. Conversely, in a Watch List universe, changes over time in PE and PEG can be a signal that a stock is getting more attractive. [That's sounding like market timing--it isn't]. The question is, if you are dollar averaging, but trying to pick stocks, as cash comes available, the stock that has the lowest valuation, partially measured by PEG, relative to its historical valuation might be the most attractive investment. btw, also--The G&K index may be relatively inflated by this measure currently. Why is it that the G/K's haven't fallen the same way the rest of tech has? It isn't because their prospects have gotten 40% better than the rest of the market over the year. (They have gotten better, but not that much better). My hypothesis is that there has been a flight to quality, as investors have deserted some more risky techs, but want to stay in tech. They stay in the stocks they know will be around. As fear lessens, at some point, the "candidates" (for lack of a better term) will become relatively more attractive, and the disjunction between the two worlds should decrease. edit--re Intel. What you say makes sense.