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I share your misgivings about the MSFT holdings (at least for the short term). Have been lurking about the Workshop board and ran across posts regarding the RSO screen (relative strength - overlap) wherein only the stocks appearing on both the RS-13 and RS-26 screens are included (in the RSO screen). By the way, the folks over there have back tested the RSO screen 30 years and it has roughly doubled S&P in those years. They have annointed it the champeen screen. According to their screens from 4/7/00 (seems like an eternity!) there were only three stocks to make the cut for RSO: Advanced Micro Devices (AMD) Immunex (IMNX) and PMC-Sierra (PMCS). AMD is NOT currently included in the Q holdings the others are at 1.97% and 1.51% respectively.
There is one other variable that bothers me and that is the psychological thing out there about value. Last week on Bloomberg I saw an interview with a Wharton prof who said that only within the last few months (maybe 6 I can't recall) have we ever had P/E multples exceeding 100. What does that fact bode for ANY kind of historical analysis. Are folks gonna be scared off of anything that doesn't have a resonable P/E? I'm not saying that necessarily matters in a fundemental analysis but perception is reality. (By the way I just checked the MSN investor and got the following:
AMD is at 66 down from 69 with a P/E ratio of 47.3! Which is a lot lower than I thought it would be... but IMNX has a P/E of 548 (even after yesterday and an almost 18% drop).
Just sumthin' a total neophyte is chewin' on right now ...
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