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Hi Hewitt,

I have to admit that I probably sold UNH too soon a few months ago. I bought in early '04 when it had a P/E around 20. Sold a few months ago (around 51 or so) when the P/E creeped up to 25. I reasoned that when I bought it's PEG was 1 or less, but when I sold, I was holding a stock with a P/E of 25 that was probably only a 20% grower.

Maybe my 20% growth rate estimate was flawed, as I didn't think UNH's 30% growth rate was sustainable for a company of its size. I love buying stocks with a PEG less than 1 but I do get skittish when that P/E creeps up around 25 or 30, since that leaves a lot of room for the stock to fall without any change in earnings. Though it's tough to see UNH continue its perennial climb upward without having a part in it...this stock never seems to go down!

In fairness, the same logic did help me sell Harley Davidson (HDI) around its 52 week high back in the beginning of the year. But I would love to hear your thoughts on this topic.

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