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To: ild who wrote (140771)	12/28/2001 1:39:34 PM
From: reaper	Read Replies (1) \| Respond to of 436258

Everything (not just retailers) has gone up due to the hopes of the V -- just look at my notes re:PTEN which is trading at 4x the value of what they just bought some rigs for. Here is why I would personally be careful with the good but expensive retail stocks. My personal opinion is that we are in a likely moderately deflationary environment, that the economy will be weak in 2002 but not "tough love and economic violence", and that for these reasons the bond market rally is not over and ten-year yields will hit 3.5%. In this sort of environment (i) true growth stocks will be few and far between; and (ii) true growth stocks will get astronomical multiples. Companies like Bed Bath, Outback, PF Changs, and others with exceptional capital returns will be able to continue to GROW even in this environment; Bed Bath could suffer a comp decline of as much as 10% and still grow earnings as they are growing square footage 25% a year, and generating more than sufficient cash flow to do so. Now, I think that hoping for even higher multiples in a low-interest-rate-with-few-growth-alternatives is a piss-poor reason to buy a stock; you're basically playing the greater fool game. But I wouldn't short them. Remember how high tech multiples got, how we all started screaming how insane they were about 1/3 of the way to their ultimate multiple peak. IF my "weak but not catostrophic" scenario comes to pass, it would not surprise me to see Bed Bath carry a 70x multiple. On the other hand, in my view of the world access to capital will be limited. So companies will be forced to rely on internal cash generation to grow. Companies like ANN and LIN generate very little cash, and in a tough economic environment will generate even less. They will not be able to grow their businesses. So as Bed Bath's multiple goes to 70, Linens&Things' will go to 10. All this is IMO only, of course. WTFDIK. Cheers