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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (67028)	2/11/2005 9:04:13 AM
From: Dave	Respond to of 77400

While I'd agree that the Fed model shows stocks sharply undervalued, PE ratios are still in the top decile historically. I'm not sure if anyone focused their research on this, but haven't companies' Return on Capital increased over the past couple of decades? Of course, part of this increase is due to off balance sheet activities such as Financing transactions. However, isn't another portion of the increase due to technology and advanced in Supply Chain issues and the like? If a company's ROC begins to increase due to said efficiencies and ignoring "off balance sheet" activities, that implies that their cash generation increases, all else equal. As cash generation increases given that their money isn't tied up in W/C causes the PV of their future cash flows to increase. Would you happen to have easy access to older data which could prove or refute this hypothesis? Dave

To: GVTucker who wrote (67028)	2/11/2005 9:26:09 AM
From: rkral	Read Replies (1) \| Respond to of 77400

GVTucker, re "PE ratios are still in the top decile historically." Over what time period? Do you have a linkable source? TIA, Ron

To: GVTucker who wrote (67028)	2/11/2005 9:49:55 AM
From: RetiredNow	Read Replies (2) \| Respond to of 77400

Top decile. I don't buy it, unless you can post some proof. According to the graph I posted, PEs are back near historical averages. The average if I remember correctly is something like 17 over the last 50 years. I'll look around for a link. Anyway, PEs taken in isolation don't tell you much. You need to look at it as it relates to bond rates, because money finds its way to the best returns. Unless we're in a new environment where both bonds and stock do poorly, I'd say we will have a correction of the imbalance to the upside in stocks and to the downside in bond prices.