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

To: hsg who wrote (79574)	11/13/1998 2:28:00 AM
From: powershred	Read Replies (5) \| Respond to of 176387

Great gaps in theory vs reality. Great growth stocks rarely come with low P/Es. If a tech/growth stock sports a low P/E, chances are it is out of favor and may never regain its lustre because of various factors (obsolete technology, competition, etc..). If I had listened about the preaching of buying low P/E stocks..I would have never bought MSFT, CSCO, YHOO, AOL, and DELL and stuck with IBM, CPQ, etc.. The story here is cash flow and DELL generates it like no other..I just find it amusing that no ANALyst (who are usually armed with CFAs and MBAs)seem to pick that up instead they pick on most irrelevant things such as whisper numbers, gross margins being flat, etc...Best of luck timing your purchase. Regards.

To: hsg who wrote (79574)	11/13/1998 2:30:00 AM
From: michael modeme	Read Replies (1) \| Respond to of 176387

That is why I said that the P/E ratio is a measure of the risk involved in purchasing stock. I am specifically refering to diffusion models of the form: d¿(x(0),x,t)/dt = Exp{ dM(t)/dt + 0.5 d(V^2)(t)/dt }; where ¿(x(0),x,t) is the probability density of the share price (could be nonstationary), M(t) is the drift term, and V(t) is the variance term. Under this model, the results that I've posted follow, and it looks like these types of models fit the empirical data well. I should also point out that these types of models indicate that one should by companies like DELL that have their earnings growing at enormous rates, if you are willing to tollerate the risk (P[X(t) < µ \| X(s)], for some predefined value of µ). Options require a differet strategy since it can be shown that under such a model there is little dependence on the drift term, and a large dependence on the volatility term. Good luck. Cheers