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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Paul Merriwether who wrote (32536)	3/5/1998 9:33:00 PM
From: Chuzzlewit	Read Replies (4) \| Respond to of 176387

Paul, one may look at the glass either as half empty or half full. While Dell has been growing rapidly, it certainly isn't the dominant manufacturer of computers. Most interesting of all, Dell is really a niche player, having eschewed the casual and gaming home computer market, and focusing instead on the business and power user markets. These segments are not where the blood-letting has been. Based on the most recent quarter's results, my analysis tells me that the $7.91 figure will be revised upward to at least $9.00. So, the question is, if we have earnings of $9.00 in 2001, and we use that as a surrogate for dividends, and if the growth rate is 9% and the cost of capital is 10% then the value according to the Gordon perpetual growth model will be about $900 in 2002. Now, that's four years from now and the current price is about $130. This implies an appreciation potential of about 62% per annum. Notice that this is much higher than the current P/E, which accounts for the perception of many people that this stock is "undervalued". Now it would be lovely to quadruple your money every year, but that simply isn't going to happen. Your critique of my position needs some math behind it. My position is based on MPT and CAPM models. I must run now -- dinner is ready. I'll pich this up later. Regards, Paul

To: Paul Merriwether who wrote (32536)	3/5/1998 10:45:00 PM
From: Chuzzlewit	Respond to of 176387

Okay, back from dinner. I discussed one of your earlier points with Chuzzlewit over a plate of lasagna, and he pointed out top me that the people on this thread buy and hold, or if they're like Kemble and Venkie, they buy and buy! So, as Chuzzlewit so correctly points out, this cannot be akin to the tulip craze because the ordinary people buying this stock believe in it for the long term. They are not looking for the greater fool! They are not buying because they think it is undervalued! They are buying growth. Sure, Rosemary and TR get excited at the prospect of a split, but they bought this stock because of its long term potential. These people show a great deal of wisdom because they are patient and they don't get rattled by the daily vicissitudes of investing. I do get my best ideas from Chuzzlewit, although I don't like to give him too much credit. He's got a swelled head anyway because buying Dell was his idea to begin with. He has promised to explain to me next week how otherwise intelligent people believe in TA. He claims it has something to do with eating too much cheese and wearing orange socks. Regards, Paul