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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: BelowTheCrowd who wrote (171693)	10/21/2002 10:44:17 PM
From: Road Walker	Read Replies (2) \| Respond to of 186894

Michael, re: IOW, I would start accumulating a bit at a time starting around 12, and fully expecting that we might see 8... LOL, you would accumulate a stock expecting a 33% decline? Would you buy a $100 stock if you expected it to go to $66? The reason you would buy Intel expecting a 33% decline is that you realize the company has enterprise value beyond it's P/E or P/S. So does the rest of the market, or this negative growth company wouldn't be selling at a high PE. John

To: BelowTheCrowd who wrote (171693)	10/22/2002 11:20:12 AM
From: chomolungma	Read Replies (1) \| Respond to of 186894

I think we're heading back to a multiple range of 10-20, which is where most tech companies spent most of their time prior to 1996, and which still represents a fairly high premium compared to the historical levels for the S&P. I disagree. We can't compare historical P/E's because we are in a new environment. Interest rates, even after the economy recovers, will be low when taken in historical context. That will provide for a market P/E of at least 19, in my opinion. Intel is still growing at a rate faster than the average company and will command a higher P/E once all the fear and handwringing is over. Just you watch what happens. After a few years of earning less than 2% on T-Bills and 4% on T-Notes and paying ordinary income taxes every year on those earnings, investors will "rediscover" the market and all the talk about discount rates above 10% (like one poster mentioned) will seem silly. Risk premiums for stocks, while certainly not zero, don't need to be that high because over a long time period the volatility of earnings is dwarfed by the growth rate of those earnings. S & P earnings will continue to grow 6%+ over the next 20 years, even after recovery to a normal level which is around of $53. Since most investors have very limited choices on where to invest their liquid assets, low-interest rates will result in high P/E's.