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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: Sonki who wrote (285)	9/19/1998 10:12:00 PM
From: James Clarke	Read Replies (1) \| Respond to of 4691

Though DIS and AXP may be attractive long term at prices at or near current levels (I am more attracted to Disney than Amex), I have no confidence that any stocks are going to return to their highs within a year's time. History tells me that a quick and relatively painless 20% correction is not the way overvalued bull markets end. That's the way the "end" starts. The next step is either another quick, climactic drop (to 6000 say) or even more painfully, a long agonizing downtrend that could last years. Either way, the thought of investing in the old favorites may not be the way to go. Some of these, most notably Dell, are so far overvalued that you just wonder how attractive they are going to look when they start to really drop, and you are faced with valuing the business. Virtually no business is worth 70 times earnings. Oh, but Dell's earnings are going to double in two or three years. The risk is that EVEN IF YOU ARE RIGHT, and even if the stock trades at a high multiple of 30-35 at that time, you've lost money. And if you are not right, you're dead. I will read that article with great interest though.