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To: Chuzzlewit who wrote (50)	2/2/1999 3:39:00 PM
From: Reginald Middleton	Read Replies (1) \| Respond to of 419

The problem with PEG ratios and formulas is that they fail to reconcile accounting earnings. This is probably the single, largest error that I have seen SI fold make in regard to valuing high growth tech companies. Between, deferrals, charges, R&D, M&A, upfront marketing and advertising, varying depreciation and amortization schedules, and off balance sheet debt (such as non-capitalized leases and derivatives), non-reconciled earnings mean very little in terms as an accurate proxy for market value.

To: Chuzzlewit who wrote (50)	2/2/1999 3:46:00 PM
From: Joe E.	Read Replies (1) \| Respond to of 419

OK, I understand the YPEG, CNPEG and CNPEG2 calculations. Is there some way to use them to get a market discount rate, or how else would you use them??

To: Chuzzlewit who wrote (50)	2/2/1999 7:48:00 PM
From: MaryinRed	Read Replies (1) \| Respond to of 419

Per your chart...this is the formula: (stock's beta)*((stock's YPEG /(YPEG for S&P500)) is that what you want? I am always...concerned...when I see ratios being manipulated.... you can really get some odd numbers and conclusions... marketing people come up with all kinds of indices..that are meaningless..... so perhaps...I am overly cautious..when I study these things.... Also....current earnings have little or no relation to future earnings....in a "evolving" company....all the start up costs and marketing...r&D, etc etc.....kill the early earnings.... after their growth stablizes and they achieve...."mass" and stability....your chart could be helpful... (remember product life cycles...in business 101) but for a startup or highly evolving firm....it kinda misses the basic fundamentals....of "new product development" pro forma P&L's... where you invest....now....for earnings later...?????? or am I missing something here.....?? is that captured..somehow..in the numbers...??? smiles...mary

To: Chuzzlewit who wrote (50)	2/9/1999 5:44:00 PM
From: Will Hou	Read Replies (1) \| Respond to of 419

Chuzzlewit, Interesting approach. Could you elaborate about the purpose of this model? (Try to justify some of the high flyers with this relative "value" approach?) Have you applied this approach to the market and sorted things out yet? I'd love to hear more about it! On a separate note, how would you put dividend into this approach? Most growth companies don't pay dividend, I agree. But in order to make all things equal, maybe you should consider it? After all, Intel is paying dividend. Thanks.