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

To: James Clarke who wrote (985)	1/11/1999 1:03:00 PM
From: jhg_in_kc	Read Replies (2) \| Respond to of 4691

James, I actually DID learn quite a bit about Buffettolgy in our gorilla hunt exchange. i was hoist on my own petard. Re: valuation. The current issue of Money magazine says in re Dell(but this could be any stock for the purpose of this discussion) it says: "You pay a little less than twice the pe multiple of the S&p 500 but get just over 5 times the projected earnings growth rate." What's wrong with that? Pay 2x the PE to get 5X the growth rate (30 v. 6% per annum.) Shouldnt a growth stock's p.e. be above the average of the s&p by the very fact that it is a growth stock. It would be abnormal if it wasn't. then again maybe that abnormal situation is what you and buffet are looking for. but this is not the 70s: the proliferation of information on the internet and dozens of financial tv shows works against these bargains going unrecognized for long. what say you? jhg

To: James Clarke who wrote (985)	1/16/1999 7:58:00 PM
From: Tomato	Read Replies (1) \| Respond to of 4691

Jim, I was doing an exercise that I hoped would teach me something about valuations and Buffettology. I'm not sure what I've learned and maybe you can help me out with some opinions. What I did was compare DOV and KO to see if the comparisons would tell me something. Here's what I show from using Stocksheet.com: DOV: 5 yr. return: 142.6% ROE: around 20 P/E: around 20 KO: 5 yr. return:229% ROE: around 50 PE: 43 I presume that most people on the thread think that DOV is fairly to undervalued and KO overvalued. Could the preceding figures be enough to roughly evaluate the stocks per Buffett without going through the calculations as done in the appendix of The WEB Way? Any comments?