Lets look at this rationally, shall we? 5 year earnings growth targets by analysts have historically been accurate, though in high growth stocks they tend to undershoot. But lets assume they DO NOT undershoot, but that they are at least accurate in stocks that CONSISTENTLY beat earnings estimates. Ok, now lets compare IBM (a reasonably priced dow stock, with CTXS (a reasonably priced nasdaq stock). CTXS has a 2004 p/e of 13.7 IBM has a 2004 p/e of 13.3 CTXS will be growing at about 25-35% yearly, by a conservative estimate, in 5 years, given that in the next 5 years it will grow by 43% annually. I would therefore say that, over the long run, CTXS is cheaper than IBM. And IBM is one of the more reasonably priced dow stocks. Remember PG? That was scary, but very predictable. Some are even worse... SNE... Or there are better growth examples... However, I don't mean to send the message that all NAS stocks are undervalued, and all traditional, "old economy" stocks are overvalued. There is a mix, but I would say that the best bargains can be found in the NASDAQ. Everyone here realize that by modern--at any one time, MSFT was never undervalued, or even at the average? Yet I would rather have held it for the past 14 years than anything else... Well, almost. HISTORICALLY, actually, every single stock--without exception! is overvalued, badly. It is all just a matter of returns. Way back when, you could get better returns. Now, you can still get returns, just not GREAT returns. The balance, inevitably, must be found by if you can CREATE THE MOST WEALTH by making a new buisiness--That is, if creating a new buisiness is a better investment than investing in stocks. Effort, and hours spent, are of course factored in. Apart from this proving that this fundamental is out of whack, ONE CANNOT SAY THAT THE STOCK MARKET IS OVERVALUED, except in relation to another CURRENT market. Remember a few things: 1--The people that called the bear market were, for the most part, calling it a year ago. I laugh. 2--The people that called the bear market were, for the most part, calling it to drop substantially further just as it bottomed. (More bear fund managers were shorting at the bottom than at the top). I laugh. 3--One cannot take on NAS stock and use it as a representation of the very diverse whole--One of the most common techniques employed by the bears. 4--The fundamental attribution error--The NAS did not necessarily go down because it deserved to. If you want some Q's answered, you may email me @ Quartius@hotmail.com Or go to clearstation.com , click on recommends, and look up QQQuartius... I have none now, since I think many of my favs might go lower (short term), but I will add some periodically. My avg is a 35% profit over a 2-day avg hold (or short) period.
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Lets look at this rationally, shall we? 5 year earnings growth targets by analysts have historically been accurate, though in high growth stocks they tend to undershoot. But lets assume they DO NOT undershoot, but that they are at least accurate in stocks that CONSISTENTLY beat earnings estimates. Ok, now lets compare IBM (a reasonably priced dow stock, with CTXS (a reasonably priced nasdaq stock). CTXS has a 2004 p/e of 13.7 IBM has a 2004 p/e of 13.3 CTXS will be growing at about 25-35% yearly, by a conservative estimate, in 5 years, given that in the next 5 years it will grow by 43% annually. I would therefore say that, over the long run, CTXS is cheaper than IBM. And IBM is one of the more reasonably priced dow stocks. Remember PG? That was scary, but very predictable. Some are even worse... SNE... Or there are better growth examples... However, I don't mean to send the message that all NAS stocks are undervalued, and all traditional, "old economy" stocks are overvalued. There is a mix, but I would say that the best bargains can be found in the NASDAQ. Everyone here realize that by modern--at any one time, MSFT was never undervalued, or even at the average? Yet I would rather have held it for the past 14 years than anything else... Well, almost. HISTORICALLY, actually, every single stock--without exception! is overvalued, badly. It is all just a matter of returns. Way back when, you could get better returns. Now, you can still get returns, just not GREAT returns. The balance, inevitably, must be found by if you can CREATE THE MOST WEALTH by making a new buisiness--That is, if creating a new buisiness is a better investment than investing in stocks. Effort, and hours spent, are of course factored in. Apart from this proving that this fundamental is out of whack, ONE CANNOT SAY THAT THE STOCK MARKET IS OVERVALUED, except in relation to another CURRENT market. Remember a few things: 1--The people that called the bear market were, for the most part, calling it a year ago. I laugh. 2--The people that called the bear market were, for the most part, calling it to drop substantially further just as it bottomed. (More bear fund managers were shorting at the bottom than at the top). I laugh. 3--One cannot take on NAS stock and use it as a representation of the very diverse whole--One of the most common techniques employed by the bears. 4--The fundamental attribution error--The NAS did not necessarily go down because it deserved to. If you want some Q's answered, you may email me @ Quartius@hotmail.com Or go to clearstation.com , click on recommends, and look up QQQuartius ... I have none now, since I think many of my favs might go lower (short term), but I will add some periodically. My avg is a 35% profit over a 2-day avg hold (or short) period.