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

To: Bruce Brown who wrote (49413)	12/9/2001 3:20:19 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 54805

support your 'prediction' if we want to take the side of a TALC running out or being usurped by another leading edge technology note that my prediction is about equity valuation, not about what happens in terms of technological dominance. i do not see forward growth rates for the likes of csco and intc that would compel me to pay on the order of eight times sales for these stocks. and as you are surely aware, in the early 90s, when they were compelling investments, one did not pay anything like today's PSR on intc (as i recall, it was around 1). your argument seems to be that intc and the like deserve a valuation premium due to their dominant status. i would not argue with that in principle, but i would quibble with degree. for while today's "largeness" helps ensure that their businesses will be around tomorrow, the attendant law of large numbers (not to mention Global Economic Malaise, or "GEM" [a fresh coinage]), will be a headwind against sustainable high growth in the future. and simple math compels me to believe that 8x sales for these companies, at growth rates increasingly approximating G7 GDP growth, does not result in expected forward returns commensurate with long-term averages for their asset class.