No. of Recommendations: 1
I get the Morningstar newsletter in my email, and found this interesting. I've heard from a lot of people how horribly overvalued the Nasdaq supposedly is, and this is a bit of the other side of the story. Thoughts?


"There's been a lot of talk lately about the valuation of growth and technology stocks. In recent months, I have read numerous opinion pieces on this subject by journalists, academics, pundits, and money managers. All of these articles and papers came to a similar conclusion: Growth stocks, and technology stocks in particular, are dramatically overvalued. One money manager even claimed that the Nasdaq 100 is 60% overvalued. Many of these pundits came to this conclusion by looking at the aggregate P/E ratio of the Nasdaq 100, an index that includes 100 of the largest stocks listed on the Nasdaq exchange.


But there's a problem with these arguments: None of them has looked at the valuations of individual companies within the index. They all use aggregate data, such as the average P/E or P/B ratio of the stocks within the index...."

http://news.morningstar.com/doc/article/0,,115584,00.html?hsection=Comm1


~Windchasers
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