Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: BBG who wrote (89700)	1/18/1999 12:29:00 PM
From: powershred	Respond to of 176388

BBG..while my response is unsolicited from you, may I give you my 2 cents worth that may hopefully make sense to you (I wish someone told me this a while ago!)....Tech stocks do NOT care about P/Es..I view their value as a multiple of their cash flow. The techs that trade at low P/Es either have lost their luster (problems, etc.) or are just basically underfollowed. My old schooling of buying good P/E stocks prevented me from buying MSFT, CSCO, and the DELLs a while ago..since then, I havent looked back....regards.

To: BBG who wrote (89700)	1/18/1999 12:32:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176388

BBG, I prefer not to think in terms of P/E, but rather in terms of earnings yield. Using this way of looking at things I consider probable future earnings as a percent of current share price. When you think of it in these terms, it really comes down to a pay me now or pay me later decision. Those who invest in high growth stocks are betting that future earnings will grow at a rate sufficient to justify a lower current earnings yield. So, the converse of this is that earnings yield must increase as expectations of future growth decreases. But earnings yield is also influenced by several other factors. For example, the less risky the forecasts for future earnings growth seem, the lower the required yield. Another factor is prevailing interest rates. Lower interest rates tend to lower required earnings yield. Remember, lowering the earnings yield implies an increase in the price of the stock relative to next year's earnings. But if you are a die-hard, and insist on using price to earnings ratios, at least use a forward looking ratio. And yes, decreased growth expectations will lower forward looking P/Es. TTFN, CTC