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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Thomas Mercer-Hursh who wrote (43589)	6/17/2001 2:13:08 PM
From: Stock Farmer	Respond to of 54805

>>Isn't this [proportionate rates of growth] a rather questionable assumption for a high tech company<< Yes. Exactly. Remember that I am only demonstrating that you can relentlessly chase the derivation of PE through a set of simplifying assumptions back to discounted cash flow. IF the assumptions apply, THEN the conclusion follows precisely. But if the assumptions don't apply, well...? Hence, my thesis remains that both PE and PEG are inappropriate tools in our asset allocation toolbox. PE is kind of like having a rock in your tool chest for driving in nails. PEG is like keeping an even bigger rock to pound in screws. Nothing says such "tools" don't serve a crude purpose. But their use when other tools are available speaks volumes about the user's carpentry skills. John