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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (12504)	6/3/2002 12:42:39 PM
From: David Howe	Read Replies (2) \| Respond to of 19219

No, I think they are buying because they are seeing good values. Look at MSFT $270 billion market cap. Take the $40 billion in cash out of that and you get a purchase price of $230 billion. They generate around $11 billion in free cash flow each year. Price to cash flow ratio is 230/11 = 21 which equates to a 4.8% return on your investment. That's better than you get in bonds and it's likely to improve once the economy firms up and corporate spending gets a boost. I wouldn't invest in equities like this if interest rates were 10%, but with Fed rates at 1.75%, equities are a better deal. IMO, Dave