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Strategies & Market Trends : The Market Taught Me That...... -- Ignore unavailable to you. Want to Upgrade?

To: Michael Quarne who wrote (56)	11/7/1997 5:34:00 AM
From: Paul van Wijk	Read Replies (1) \| Respond to of 151

Michael, The simpliest way to calculate the price of a stock is to compare the P/E with the growth in earnings. ASMLF First thing I do is go to this link quote.yahoo.com I look for the earnings-estimates, compare the numbers and calculate the growth. In this case it is 60%. If growth <25% then I'm not interested. If growth between 25 & 40% then growth = P/E If growth between 40 & 70% then a P/E of 50 is fair. If growth > 70% using P/E to calculate the value is useless. So in ASMLF case a P/E of 50 is fair. Then I look over their track-records. www1.wsrn.com If solid growth for many years P/E +10 If many ups & downs, then forget it If small track record, P/E -10 If one down period in the past, no big deal. The further away, the better it is. In ASMLF case, solid growth over a short period. Let say, P/E - 5 = 45. Then I do research on the company. I read anything I can find about the company. Again, looking for facts, not opinions. In ASMLF-case you will found out that they are good. P/E + 5 = 50. So in ASMLF-case we have a price-target of 50 * 3,28 = $164. Then I have a quick look at their chart looking for a good moment to jump in. I just recently started studying on TA. After buying I only sell if it has gone up way too fast. This usually happens once or twice a year. So I don't jump in and out every week or month. As you can see I like to keep things simple and I'm not interested in details. I'm looking for the overall picture. And I don't like to gamble. The worst that can happen is usually that I have to wait for the profits. But because I know what I'm waiting for I have no problems with that. I know their are much better ways to calculate the value of a stock. But this is how I do it. Paul