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

To: Stock Farmer who wrote (52156)	4/26/2001 8:16:11 AM
From: RetiredNow	Read Replies (5) \| Respond to of 77400

Great! You're on. BTW, you give me any company that you'd rather invest in and we can use a discount of the opportunity cost of capital and you'll find that it's DCF value is much less than what it's trading now. So does that mean everyone should sell all stocks, because they are all over valued? Of course not. You'd be losing out if you did. The only company that I can think of that might trade less than its DCF is Exxon, but would you put all your money in that stock? Well, you may if all your were seeking was preservation of capital. But if you wanted better returns, you'd have to take more risk. There was a study done that compared investment in companies that were priced "appropriately" in the market against investing in companies that were priced at a premium in the market. Guess where you made more money over the long term? That's right. You made more money in the one's valued at a premium. You know which companies, I'm talking about? Intel, Microsoft, Cisco, Sun, and Dell. You may continue to call it the greater fool theory, because in some ways it resembles that, but it's the way the market has worked for two centuries and no amount of arguing that it shouldn't be that way will make it change. Let's face it, we are not a society of accountants. This market is full of fuzzy thinking that drives prices up and down. As long as we don't have perfect information and people with enough pedigree in the right areas to be able to decipher this perfect information, we won't have companies valued at their "true" value. That's the market. You can come to understand that and benefit over the long term, or you can fight it and watch as others make money in it. Now 10 years from now, I'll take all my money and invest it in defensive investments like bonds, etc. Then I'll be happy as a clam to let all the others out there beat me with their returns, because I'll be preserving my pile, not trying to make more of it. Then you and I will be on the same page, because hell, government bonds are always priced close to their true value, aren't they?