To: tiquer who wrote (3612 ) 8/13/1998 12:54:00 AM From: ed Read Replies (2) | Respond to of 21876
I have tried to ask Mr. Nathan the following questions in my previous posts, but never got answered but fierce personal attacks. Hope anyone smart on this thread can answer the following questions : 1) Why Mr. Nathan claimed LU will drop to $50 ( 50%) , not $40 or $30 ? 2) Why Growth rate smaller than PE ratio = no good ? and who set this rule ? In my opinion ( reverse thinking), Growth rate smaller than PE = Good. Why ? Because High PE and high growth rate means products of the company have high potential, and company has strong R&D teams which can develop products fast and push the products into market for profit.Which also means company has strong managing teams with vision, and high productivity. All the above factors, large market , strong R&D and managing teams, high productivity make a company of high growth. As a result, the stock price appreciate, and higher PE. Companies like MSFT, CSCO, LU, DELL, Yahoo(future potential), AOL, ..etc all belong to this group. Well, for lower PE, this only means that the future growth of company is limited, and the stock did not appreciate as fast as those whose potential of future are much higher. Look at the Auto industries, OIL and GAS , Utility ....etc, You can easily find many stocks with low PE , whose future growth is limited to the natural growth of population, and competition is fierce. So, I will count those stock which can break the barrier of " PE is higher than growth rate " as an indicator of good, and growing stocks. While those which can not break this barrier as a stock of limited future growth. Finally, let me ask members of this thread the following question: Why do you jump into the LU boat ? Did you buy LU because of its future potential of growth, its strong managing teams , and R&D capability (Bell Lab),... etc ? Do you think the high PE of LU , but back up with quarters after quarters of high growth , is a problem ? If you think High PE of LU is a problem, then why don't you buy those stocks of low PE but with very limited of future growth ? I hope we can start a constructive discussion over here on this thread, and no more personal attacks , please. Of course , when you answer questions, or place a statement, please give your reasons to back it up, instead of saying " LU will drop to $50 in the next 5 month ", or " Growth rate lower than PE = No Good" without any reasons or discussions to back up your statements. I call these simple statements without reasons to back them up "NONSENSE " !!!!!!!!!