Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Stock Farmer who wrote (49483)	2/28/2001 10:54:33 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 77400

OT--I think the PEG ratio will rank high among casualties of this bubble. Another dead fish trying to prop another (former) highflyer on the PEG argument just now. The problem with PEG as a means of cheapifying the appearance of high-multiple stocks is that one can end up using an unsustainably high divisor (e.g., 500% YoY earnings growth) to justify an unsustainably high dividend (i.e., PE). (Of course, that is typically the only kind of dividend one would talk about with such stocks -g-). Thus we have a conceptual error marking the first order. This is compounded to the second order due to measurement error (i.e., cases in which earnings are overstated for various reasons--options, writeoffs, earnings misses, the usual suspects). You know the drill. The compounding of errors to multiple orders can result in price deviations from DCFA approaching the infinite, gone asymptotic, ballistic--there is no turning back. That's what happens when a stock has a market cap of $15 billion one year and is delisted later on.