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

To: michael97123 who wrote (44862)	12/18/2000 10:13:39 PM
From: Stock Farmer	Respond to of 77400

Hi michael97123 - Not true to think I always thought of CSCO as over valued. That's like thinking bambs was always a bear. Go back to 5 years ago or more. Quite nicely undervalued for growth prospects at that time, and lots of room to grow into value. A growth stock has value because you will be able to sell it to some future person for more than you purchased it today. As a company grows, the velocity with which such a future unfolds diminishes over time. Sooner or later it reaches a point where the time rate of change of value has reached a point of diminishing returns. That's the best point to sell. Sure, you leave money on the table. But you can take the money you end up with and plough it into another growth story that is in its early prime. The trick is balancing anticipated differential growth rates, tax costs and so on. Recall my strategy is growth to fuel income. Not growth for growth sake. So I want to harvest it as the marginal rate of return begins to decline. I became concerned with CSCO's prospects about 3 years ago, particularly as stock price growth was out-stripping economic growth, and price had moved several years into the future. As to always continuing to believe a company like CSCO to be overvalued. Not correct. I'll be specific. There was a time when I believed CSCO to be well priced growth. Today I believe CSCO is over priced by at a factor of two or so. Depending on what its price does in the future, I may end up believing it is a bargain. Because of how tightly CSCO is entwined with the psyche of the new economy, I do not want to see it become a bargain any time soon. The carnage and collateral damage will not be pleasant. John.