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For a simplistic answer, take Intel's revised projected annual earnings
growth rate and compare it to Intel's PE. If the projected annual
earnings growth rate is lower and is expected to decelerate, it is a
major problem. Most mature tech companies today carry PE's well above
their earnings growth rate and many may run into serious reservations
regarding earnings.
Brokerage analysts fight ever harder to justify ever higher PE's so they
can shill more stock to their customers ... moving from trailing
earnings (early cycle), to next year estimated earnings (mid-cycle), to
as many years out estimated earnings as they can get away with (late
cycle). At some point they run out of juice and the PE's contract ...
this may very well be that time for the tech companies.
Earl
----- Original Message -----
From: "David Neeran" <dneeran@xxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Thursday, September 21, 2000 7:18 PM
Subject: [RT] Re: Market - OEX
> I admit I am not an expert in this area. BUT, is the INTEL
> warning THAT bad? It appears to be a few percentage points off the
> estimate or previous guidance. Comments on this please.
> Secondly, I understand INTEL is a major holding in most of the big
> funds, will they allow it to fall further? At what point will they
buy.
> Thirdly, and this is my conspiracy theory: they downgraded
> the chips then bought at the low, they have killed the telecoms and I
am
> sure are snapping them up again, now they take down Intel and
> the chips and the whole market and will load up at the lows.
> A possible scenario ( every scenario being possible) is a
> sharp opening down draft until 11 am or so ... then a rebound
> right into the end of month and quarter.
> I just don't buy a serious decline right now.....
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