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BobR,
Thanks this formula gives me something to work with, for any stock, whether
tech, energy or whatever.
My point in asking the question is to attempt to determine when there is
value vs. overvalue and this may work. Since the pendulum frequently swings
too far in both directions this approach maybe be enlightening perhaps more
on the down slope, since trees did grow to the sky in the past few years and
now I would like to know when they grow "underground".
As a side note Ira I share your experience of never buying anything that did
not go lower or sell something that did not go higher. Some aim for the
middle 70-80%, heck I will take the middle 40-50% if I can get it. I
normally sell too early and buy too soon, but I do trade my size and that
has made all the difference. As I have state right or wrong I have never
been a short seller of stocks other than Amazon. When it comes to futures I
have no problem with buying or selling so maybe that is something I need to
work on going forward.
My intent in asking the question is to try to establish "some light" tech
positions potentially, therefore I am trying to figure out where the
pendulum might be for some of these companies, still over valued, or
approaching some sort of fair value. Depending on what I am able to figure
out will determine my investment stance if any, trader or investor, or stand
aside and wait.
don ewers
----- Original Message -----
From: "BobR" <bobrabcd@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Sunday, March 11, 2001 9:55 AM
Subject: Re: [RT] Valuation - Tech
> 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/
> >
> >
>
>
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>
>
>
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>
>
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