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Of course charts will tell you the answer just like finding a lost item will
be in the last place you look, but Don asked for something fundamental, I
don't know how more fundamental you can get than earnings, growth rates and
bond yields. Weather that formula holds today is another question. In 1987
it worked remarkably well in predicting the crash lows of 2,000 stocks.
not a fundamentalist, just a collector of mkt trivia,
bobr
----- Original Message -----
From: "Ira Tunik" <irat@xxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Sunday, March 11, 2001 8:13 AM
Subject: Re: [RT] Valuation - Tech
> Everyone has a different way of evaluating a companies worth. This is the
> harvard business school. There are those that value based upon return on
> assets, Buffet, there are funds that value based upon cash flow and there
are
> other that base upon growth, PE ratio, book to bill, and dozens of other
> methods. The fact is that stocks have absolutely no value except at
liquidation
> or there is a dividend return upon invested capital. Other then that it
is all
> based upon the greater fool theory. No matter what you pay for a stock it
is
> worth no more then what someone else will pay you for it. No matter shat
the PE,
> cash flow, growth, balance sheet, etc.. There are retirement funds that
own huge
> positions in companies and yet have no say in its operation. You can
check with
> the California Teachers Assoc. as to some of their positions in the past.
The
> only thing that really counts in ones evaluation is if someone else's
money is
> going in, price is rising, and you can get in and get out before someone
else
> says "Oh, Boy, I think that I will sell this one." The reverse is true on
> stocks heading south. You can have 2 stocks in the same industry, with
the same
> sales and profit structure, and the same balance sheet, and they are
trading a
> very different prices. Why? One is followed by the major firms, touted
by the
> gurus, and recommended to the funds and the other doesn't bother to go to
dog
> and pony shows put on by the industry. The charts tell the whole story
that is
> of interest to any trader or investor. This may be very simplistic, but
you
> will find that it is true. Price will go down until it turns around and
goes
> back up again and it will go up until it turns around and comes down
again.
> Trying to guess bottoms and tops is living in a fools paradise. In over
30
> years I have never sold a top that didn't eventually go higher or buy a
bottom
> that didn't eventually go lower. Everyone that trades or invests
successful has
> a system. If the system is good it will reap profits. If the system is
flawed
> losses will occur. The most important part of any formula or system is
the
> implementation. So no matter what the out come, you are solely responsible
for
> the outcome. Ira.
>
> BobR wrote:
>
> > Sourced in part from Harvard Business Review May - June 1988. More
detailed
> > explanation is attached.
> >
> > V = EPS(8.5 + 2g)4.4/Yaaa
> >
> > V = company's intrinisc value
> > EPS = company's last 12-month earnings per share
> > g = company's long-term earnings growth estimate
> > Yaaa = is the yield on AAA corporate bonds.
> > 8.5 represents the appropriate P-E ratio for a no-growth company as
proposed
> > by Graham
> > 4.4 was the average yield of high-grade corporate bonds in 1962
> >
> > To apply this approach to a buy-sell decision, each company's relative
> > Graham value (RGV) can be determined by dividing the stock's intrinsic
value
> > V by its current price P.
> > RGV = V/P
> > An RGV of less than one indicates an overavalued stock, while an RGV of
> > greater than one indicates an undervalued stock.
> >
> > bobr
> >
> > ----- Original Message -----
> > From: "Don Ewers" <dbewers@xxxxxxxxxxxxx>
> > To: "Real Traders" <realtraders@xxxxxxxxxxxxxxx>
> > Sent: Sunday, March 11, 2001 5:37 AM
> > Subject: [RT] Valuation - Tech
> >
> > > Avoiding trying to figure when and where the NASDAQ will potentially
turn
> > > for the moment, what is the criteria one should use to invest again in
> > > technology.
> > >
> > > If possible let us also avoid an economic turn which understandably is
a
> > big
> > > part of the formula as is "product", market potential and so on. It is
> > > certainly not just price (XYZ has dropped below $20).
> > >
> > > Past earning performance, price to sales, price to book . . . . what
does
> > > the "institutional" investor use to decide when to step in and
"invest"
> > once
> > > again in this sector (or should I say carnage) assuming their
investment
> > > horizon extends out for 1-2 years maybe more.
> > >
> > > Is there anyone on the list that knows what they look at
(understanding
> > > there may be better areas to invest in such as energy, value companies
> > etc.
> > > right now).
> > >
> > > Bottom line when will the Intel's, Sun Micro's, Cisco's, Microsoft's,
LSI
> > > Logic, ADC Telecommunications have "value"? Thoughts anyone. Does this
> > > really represent a significant opportunity today for one who has so
far
> > > avoided this massive drop, as some are touting?
> > >
> > > The charts should tell us when to invest and that may be the ultimate
> > > answer, but for the moment is there any "fundamental's" one could look
at
> > > also.
> > > don ewers
> > >
> > >
> > >
> > >
> > > To unsubscribe from this group, send an email to:
> > > realtraders-unsubscribe@xxxxxxxxxxxxxxx
> > >
> > >
> > >
> > > Your use of Yahoo! Groups is subject to
http://docs.yahoo.com/info/terms/
> > >
> > >
> >
> >
> > To unsubscribe from this group, send an email to:
> > realtraders-unsubscribe@xxxxxxxxxxxxxxx
> >
> >
> >
> > Your use of Yahoo! Groups is subject to
http://docs.yahoo.com/info/terms/
> >
>
------------------------------------------------------------------------
> > Name: RGV.rtf
> > RGV.rtf Type: WINWORD File (application/rtf)
> > Encoding: quoted-printable
>
>
>
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>
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>
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>
>
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