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basant
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   Posted: 09/Oct/2007 at 2:55pm |
Originally posted by xbox
PE Expansion candidates......silverline, GTL, HFCL..list is endless. Any takers .... |
Where is the EPS?
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basant
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Posted: 09/Oct/2007 at 3:48pm |
Originally posted by basant
I was never discussing macro calls. What makes you think so. All that I wanted to elaborate was that biggest money is made/lost ina PE rerating and a PE derating and that at this point it is better to follow companies that are conservatively valued and that to me it is difficult to locate multibaggers and till I get one I would be happy to see my money in steady businesses that give 30% CAGR.
That is more of a cautious call rather then a macro call. 
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When I talk about PE derating I am normally referring to stocks that sell at PE's of more then 50 - 60 times current year then otherwise.
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smartcat
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Posted: 09/Oct/2007 at 3:59pm |
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I know that when PE re-rating happens, stocks suddenly shoot up. But what about PE de-rating? Generally is it a slow quarter by quarter process or does the stock price go down like a brick?
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basant
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Posted: 09/Oct/2007 at 4:06pm |
Originally posted by smartcat
I know that when PE re-rating happens, stocks suddenly shoot up. But what about PE de-rating? Generally is it a slow quarter by quarter process or does the stock price go down like a brick? |
PE derating happens in a matter of days. look at how Infy adjusted for a lower PE in 2001.
Problem is PE derating does not happen in isolation it is backed by a EPS contraction because unless there is aproblem with the EPS why should the PE contract so it is a double whammy = Lower EPS on a Lower PE.
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reetesh
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Posted: 09/Oct/2007 at 7:07pm |
This thread made me think like that, the name itself is self descriptive!
There is discrepancy in thought process! If PE is low it will remain low and where PE is high we are getting cautious then which way the boat is heading I am confused?
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When going gets tough, that’s when tough (people) gets going.
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basant
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Posted: 09/Oct/2007 at 8:03pm |
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Don't worry this market will confuse a lot of us.
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go4lalit
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Posted: 09/Oct/2007 at 8:53pm |
The question of PE derating was there one year back also.
- Fundamentals have changed in last 1 year, as the same PE is looking expensive now.
- Fundamentals had changed in past 1 year, but we ignored them and failed to read the signals.
- If fundamentals havn't changed, there is no need to worry as EPS growth will pick up.
Now the winner is someone who never blindly followed the arguments but did his own reasoning and sticked to his perspactive (example xbox and many more).
We need to build our own conviction and that can't be borrowed.
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kulman
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Posted: 09/Oct/2007 at 9:08pm |
We need to build our own conviction and that can't be borrowed.
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Well said Lalit jee.
Conviction can't be borrowed & it would be worse if one tries to leverage it.
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