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Technology Stocks : LSI Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Andy M. who wrote (24166)	9/22/2001 8:00:30 PM
From: sea_biscuit	Read Replies (1) \| Respond to of 25814

Andy, I think the shift in perception is caused by the maniacal speculation of the last 2 or 3 years before the bear took over. Instantwealth.com is down 96% from its highs, so people get the tantalizing feeling that it has got to be undervalued now. There is no real basis for thinking so. Psychologists call that "anchoring", I believe. That is why Addi happens to throw around numbers like 100 and 250 when he talks of LSI's future prices. He is not pulling them out of thin air. He is anchored to the highs that LSI hit during the mania. Plus of course, being Addi, he multiplies it by 3, for good measure! :-) Almost every large-cap is overvalued even now. Especially the growth part of the large-cap segment. INTC is trading at 4 or 5 times sales at a time when sales are going down. GE is trading at a P/E considerably higher than its earnings growth rate. This market still has a long way to fall, but if the government doesn't allow it to happen, things will be even worse -- it will go nowhere for several years.

To: Andy M. who wrote (24166)	9/23/2001 6:04:40 PM
From: sea_biscuit	Respond to of 25814

Andy, One of the reasons why I think this market is still overvalued is based on the P/E ratio. At the peak, QQQ (i.e. Nasdaq 100) was selling at a little over 240 times earnings, and the price was 120. So that implies an earnings per share number of $0.50. As of the latest close, QQQ was at 28 or so. This means, based on peak earnings (which have since plummeted and should no longer should apply anyway) and today's prices, we are now at a P/E ratio of 56. Now, if the earnings were growing at a rate greater than 56%, we could say that the stocks are undervalued. However, the earnings were NEVER growing at that pace -- not even during the boom phase. Another thing we are ignoring is that even that $0.50 earnings numbers were obtained after all kinds of "ledger-demain", sleights-of -hand and other forms of "creative" accounting. Some of these contrivances are no longer available, either because the regulations have been tightened or because circumstances have changed (some of these accounting tricks work only if stock prices are rising; however, that is no longer happening). Such has been the extent of the mania that even after the stocks have been decimated, they remain wildly overvalued. This is something that we will be telling our grandchildren, for sure!