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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (3808)	5/22/2001 9:38:37 AM
From: Stock Farmer	Read Replies (2) \| Respond to of 74559

Hi Jay, As your imagination roams, here's something to toss in your back pack for it to chew on if hunger strikes. I've been debating over on the Cisco thread a "fair" price of a slice. Not that it matters because the price will be what it will be, but the workout is good for the mind. There is an emerging "I don't want to know" realization dawning. Finally we ended up with the "future looks bright" / "how bright" / "very bright" / "how bright is very bright" discussion terminating on an optimistic model Message 15826969 Which says that the maximum the company could be worth in 2005 might be $40 if it executes flawlessly, likely $30 and perhaps even $20 - corresponding to 15%, 8% and 0% annual growth. We did not explore models that had CSCO priced like a mature company in 5 years (PE of 20 for example). That would be a greater stretch than the elasticity of most neurons could withstand. Yet even as the idea began to sink in, we see the price of CSCO pop up by 10%, further reducing expected 5 year returns (13%, 6% and -2%) respectively... closing in on worse than a T-bill for the risk... yikes! And this is the bullish case! The bearish case is lousy. A few more days like yesterday and we're in trouble. I can't see the US investment community allowing CSCO to trade essentially flat for the next 5 years with 5 big 10% days in between now and 2005. It just doesn't compute. Which invites an Up Down Up Down Up Down... mostly flat but slightly nowhere trajectory like a rollercoaster. People pay to go a very short way between the entrance line and the exit line, but feel that the experience has been quite worthwhile. Or CSCO doubles, Electricity doubles, Oil doubles, Housing doubles, (gold goes up by 25% just to annoy Jay). We're all happy with our increased wealth... Hmmm... John