I agree with almost everything you say. I can see these tech stocks going higher for at least another year, 18 months maybe. The market as a whole should see rises for many years to come as more and more people get involved in the market either through their IRAs, 401ks, or as individual investors. This will keep the supply demand factor in tact and keep PEs at current highs. But what will change this in my opinion is when these "new economy" stocks become no longer "new economy". They will eventually be taken for granted. When all this new technology becomes commonplace, these innovations will no longer dazzle people and the PEs will come back down. I have been guilty of buying stcoks in the past in order to apply the "bigger sucker than me" theory when I hope to sell. I honestly don't know much about JDSU and what they do; fiberoptics I believe, but more than that, I'm lost. I just think that a company with a market cap of 100 billion has alot more downside in the short term than upside. They need to earn 1 billion a year to have a PE of 100 and their revenue, not earnings is 25% of that. In the short term and in the long term, it is the money managers and financial institutions that place the PEs on companies. Small investors can run these numbers up or down a few percentage points on short runs, but when the people with 100,000 to 1,000,000 shares decide they have made all the money they think they can in the stock, it will fall precipitously no matter how many small investors choose to go against them.
I remeber reading an article written just a few years ago. In 1995 I think, give or take 2 years. I read it within a the past month. It told of a company that had just reached the market cap of 100 billion. Everyone was astounded. The company was a relatively new one. It had been in existence for just about 15 years. They had huge revenues, great profits and a fabulous prospect for the future. OIt had just become the biggest company by market cap in the world. It was Microsoft. I really don't think the economy has changed that greatly in 6 years. I could be wrong. It has been known to happen on rare occasion, but holding companies with market caps of 100 billion with a PE of 4 or 5 thousand is risky business. Feel free to give me a rebuttle, I can be persuaded by intelligent discussion.
I'll buy on dips. This stock should be a long term play IMO. Any price is a good price if you hold this stock for long term. In ahort term, it has already corrected little bit, I think next week it should go up by at least $10. Again, this is simply my guess based upon trading pattern. Be careful with short term trade since Green Span show is coming next week.
I heard yesterday that JDSU has a market cap of 100 billion with like 270 million in revenue. Is this right? Doesn't that scare any potential investors? They are valued at more than half of AOL and I would venture to guess that not 2 out of 100 non investors have ever heard of this company. Any thoughts?