irondoor91

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  • The Most Dangerous Place to Get Investing Advice
    Again, another template from a "common sense" commentator.

    The example cited, Cisco, has been selling routers forever. At the top, it had a P/E of 132:1, a market cap of 543 billion and sales of 12 billion.

    Today, the P/E is 10.5, it has sales of 39.5 billion and a market cap of 104 billion.

    The stock price today, around $17, is the same as it was in November, 1998. Cisco has never paid a dividend.

    If I am a long-term investor, could somone please tell me why I should be interested in buying Cisco today? Will the E of the P/E continue to increase, will the P/E ration expand, will they sell more routers, will management continue to perform, etc. etc.

    If Cisco can double, why can't it be cut in half? Last question: how many products, companies, financial statements, management qualifications, etc. can the author be an expert on?

    Don't you see that this is the same sales pitch that every mutual fund manager, private equity manager, etc always make. These fundamental approaches are 99% of the way its sold in the professional marketplace. Only 1% of investors rely solely on technical analysis. I don't have it in front of me, but I would guess that the vast majority of the Fortune 400 have made their money in private businesses that later went public, in leveraged real estate or some form of commodity business such as oil.

    There will be very few professional money managers in the 400. Maybe a while ago, but not today.
    Oct 17 12:29 pm |Rating: 0 0 |Link to Comment |View article

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