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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: jmootx who wrote (71384)	3/6/2001 2:33:53 PM
From: Doug	Read Replies (1) \| Respond to of 99985

Jmootx: It seems that the sentiment in the TECH's is very different than in other sectors that have been thru a downturn. Energy is still the largest Global Investment. Despite that in 98, as energy prices dropped, the Market dropped the P/Es to 6 for some drillers. Similarly when the pharmas were hit , they dropped the valuations to 20. Drops in P/E's in Sectors have been near linear with a few minor bounces. Every one knows that the TECHs are in a downturn which is likely to extend to Oct.. Yet we see a pattern of 3-5% rallies even on downgrades. This pattern of increasing valuations for the TECHs may as Cramer said be driven by Hedge Funds and day traders. I have not seen an equivalent in any other sector. Do you have any historical reasons for this.? .....Thx.

To: jmootx who wrote (71384)	3/6/2001 4:56:15 PM
From: Bruce Brown	Respond to of 99985

A great example of that was in 1992 I bought IBM during its crash--its dividend was a standard when the stock was at 100-120 in the late 80's, paying a steady 4%. Also people forget the Big Blue model "We will never lay off any of our employees, blue suits, etc.." Then when it crashed to the 40's where I bought (eventually crashed to 34, missed the climax) they maintained an outrageous 8% dividend for almost three quarters !! That marked the end..they then went on to cut that premium down to about 2-3%, began to lay everyone off, and the stock took off. So we really are in a new era for where the evaluation game will play off--again my estimation is PEG ratios is the new standard for S&P stocks and will replace PE's--I am estimating they should be about 12-18, with most OEX companies getting a premium at the high range. Careful. Last time I mentioned PEG on this board I was tossed some fire stoked wrath about the entire concept of PEG being an invention simply designed to justify higher prices. BB