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Re: [RT] Valuation - Tech



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For me, I try to use basic fundamentals and attempt to figure out when they 
stop "tossing babies".  I have seen some evidence that they are beginning 
to toss only the bath water but not enough for me to begin entering any of 
the large cap tech stocks.  I have bought some Lam Research recently but 
it's already been tossed a few times and is at a level that I feel safe 
with it now.

I doubt we will go back to the old 12-16 PE ratios as a measure of full 
value due to the broad spectrum of people in the market today and their 
ignorance of the old formula(s) but nothing is impossible.  I still hold 
energy, a couple of utilities and the nation's largest cable company, T but 
things don't seem very likely to improve dramatically until earnings 
estimates are generally revised across the board and firms can begin to 
beat these vastly lower figures.

As to the beginning of a bear market rally, we may need the panic that many 
believe is required or we may have, (from a fundamental view), already seen 
the capitulation over weeks that is normally seen over a day or two.   The 
DOW has been supported by the move out of NAS tech issues into what is seen 
as safer ground so a case can be made for the DOW to collapse from this 
over-weighting and a case can be made for that money to flow back into NAS 
stocks or another for a simple panic out of equities.  Either way, I too 
expect a rally in the NAS soon .. just not sure if it will be from this 
area or after a panic sell off, first.

I expect another 1/2 point this month and a bias to neutral which will 
hopefully stop the markets from building in the next 1/2 point and trashing 
things if they don't get it.  In the mean time, we are having some great 
swings for trading and I hope everyone here is doing well.

Bob


At 10:49 AM 3/11/2001 -0600, you wrote:
>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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>
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