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Strategies & Market Trends : Free Cash Flow as Value Criterion -- Ignore unavailable to you. Want to Upgrade?

To: Andrew who wrote (235)	6/21/1998 5:41:00 PM
From: Daniel Chisholm	Read Replies (1) \| Respond to of 253

Andrew, I went back and read post #1, and it is a good one! In that old post you wrote, What I think is silly is this "rule of thumb" that says a company is undervalued if its P/E is less than it's percentage growth rate. Again I ask why! Who calculated this ancient wisdom, what assumptions were they making, and do those assumptions apply at all times and for all companies? I have no idea, and no one I've asked has ever given a logical answer to the question. Have you or anyone else ever gotten an answer to that question? I've wondered about this piece of "received wisdom" myself, too. There's a certain kernel of truth to it, but it is just too pat. - Daniel