To: Nancy who wrote (9031 ) 5/29/1998 12:08:00 PM From: Robert Graham Read Replies (3) | Respond to
There are two different types of growth stocks. One that primarily attracts the speculative player in the market and the other that is more well-established and mature company that has slower growth but more reliable growth that has been proven over the longer term. This second less volatile type of stock attracts the more conservative investment crowd. Matter of fact, I would classify DELL as the type of stock that the public at large plays which can send the stock price well beyond fundamental valuations. Such is the life of a momentum stock. This is where the exuberant buying public gets caught up in the "image" of the company and its product, this case PCs, instead of anything to do with fundamentals, other that thinking that no matter what the earnings, it will increase, and no matter how high the stock price gets, it will go up. Sentiment to a large extent drives the purchases of this stock. However, all this company needs to do is disappoint and the speculator will start to flee this stock. Depending on the type of market, if the second type of more well-established company disappoints, many will remain with the company because their perspective is for the longer term. In time DELL can mature enough to become part of this class of stock and perhaps still maintain a very respectable growth rate.
