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How about sharing your conclusions on this subject later on. It would make
an interesting diversion from the typical read on RT. I personally have
never used that formula and only came across it long after 1987. It was
probably in the early '90s at a Meridian mutual fund promo a friend asked me
to attend with him.
BR
----- Original Message -----
From: "Don Ewers" <dbewers@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Sunday, March 11, 2001 8:49 AM
Subject: Re: [RT] Valuation - Tech
> 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
> > >
> > >
> > >
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> > >
> > >
> >
> >
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> >
> >
> >
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> >
> >
>
>
>
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