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

To: kvkkc1 who wrote (49533)	3/1/2001 5:57:38 PM
From: Jacob Snyder	Read Replies (2) \| Respond to of 77400

re: core inflation: Yes, that's one of the main reasons why I don't buy the doomsday scenarios. The two things that control stock prices are earnings and interest rates. Interest rates: Since 1980, there has been a longterm trend of declining inflation, and, therefore, declining interest rates. That pattern is not broken. We're going to see 4% 30Y fixed mortgages in the next 5 years, like we had in the 1960s. Yes, valuations got absurd in 1999-2000. But we are not going back to the single-digit PE of the 1970s and 1980s stock market, because we are not going back to the inflation and interest rates that we had then. Profits: I can still find lots of quality companies, that, even when you take out the Creative Accounting, still can be expected to grow EPS by 20% or more per year, longterm. When you can buy those companies at a PEG around 1-1.5, when they are out of favor, you're going to get 20%+/year just from EPS increases. Plus, you are highly likely to get PE expansion, when the stock (and sector, and market) goes back into favor. We are in a bear market. But it's going to bottom sometime in 2001. And people who have the courage to buy LEAPS in the quality tech names, anywhere near the bottom, are going to see 100-300% gains/year in 2002 and 2003.