I'm not sure what you are implying. None of these so-called metrics predict anything. They have precise meanings in terms of how they are calculated, but very imprecise interpretations.
Who said anything about predicting (notwithstanding the fact that you guys were trying to earlier, making all the sweeping assertions about PEG tending to one and all that)? That's a fool's errand anyway.
I am talking about the meaning and the interpretation of a construct or a financial metric. I told you precisely what a P/E ratio means. I can precisely interpret a P/E ratio for you if you gave me the fundamentals - cash flows, growth, cost of capital, as I had previously mentioned - that drive value.
The point is, the PEG ratio does not lend itself to any such interpretation. And you seemed to have missed the point that there is no literature - other than casual press anecdote - to back up the use of that metric; I can create all sorts of metrics with price in the numerator, but that means nothing. Perhaps there is a reason that such literature does not exist.
Incidentally, back to my earlier question, what is the 'consensus' that you two were bantering about earlier?
Different folks use different methods of grouping. I suppose you are one that hates it when someone uses the "," (comma) for the decimal delimiter also (as is done in a large part of the world outside the US)? If it is equivalent who cares - not everyone does it the way us "good old yanks" do it!
First off, I am from the U.S. and could care less if someone says math or maths or uses a comma instead of a decimal point. The point the guy was making is that 1000x1000=1,000,000...one million, so why not just say one million. (This works I guess unless we use Japanese notation - 100 "ten thousands" - but that is unlikely unless you are Japanese or a Japanophile, like me)
Who said anything about predicting (notwithstanding the fact that you guys were trying to earlier, making all the sweeping assertions about PEG tending to one and all that)? That's a fool's errand anyway.
You must have missed the part where I made no assertions at all about what PEG is good for, let alone, any sweeping assertions. It's just another number, like all of the others, the meaning of which you must interpret in order to glean any value. If you think it has none, then by all means, ignore it.
You certainly like to use the word metric, but that's just one of those buzzwords that gets tossed around to make a statistic sound important and serious. This discussion is starting to sound like one of those debates some baseball fans love to have over which stats are the really meaningful ones.
I used the word consensus to describe how stock prices are set by the market at any given moment in time. Today the market consensus is that AAPL is worth $208 a share. Little doubt, a different consensus will emerge tomorrow. This is a controversial statement?
What is the meaning of the 'PEG' ratio (I know what the definition is; I am asking about its meaning and interpretation)? 'Consensus' of what? Earnings? P/E? PEG? If either of the latter, where you do you find that? What does a PEG ratio tell you that you could not glean from a P/E ratio? Finally, can you point to any credible empirical evidence that links PEGs to stock prices?
Conventional wisdom is that a PEG of 1.0 is a "fair valuation" for a growth company. Consensus earnings estimates used for growth, but you can just as easily use historic growth rates.
I personally like the PEG because it takes some of the emotion and volatility out of where people think P/E ratios "should" be, and it makes it easier to play with the impact of different growth rates. It does more to say which stocks are cheap vs expensive. To me, it says that Apple is still a great company to be invested in, but Google and Amazon might not be.
You must have missed the part where I made no assertions at all about what PEG is good for, let alone, any sweeping assertions. It's just another number, like all of the others, the meaning of which you must interpret in order to glean any value. If you think it has none, then by all means, ignore it.
PEG or whatever, you've been lately predicting Apple stock prices in a couple of different posts. That's perfectly fine, but you should be able to explain/interpret the metrics you're using, if you do bring them up.
Quote:
Originally Posted by Dr Millmoss
You certainly like to use the word metric, but that's just one of those buzzwords that gets tossed around to make a statistic sound important and serious. This discussion is starting to sound like one of those debates some baseball fans love to have over which stats are the really meaningful ones.
Whether it's a 'buzzword' or not is simply a point of view. I simply meant it i the sense of a 'measure.' You can call it whatever you like. That does not change the substance of my questions.
Quote:
Originally Posted by Dr Millmoss
I used the word consensus to describe how stock prices are set by the market at any given moment in time. Today the market consensus is that AAPL is worth $208 a share. Little doubt, a different consensus will emerge tomorrow. This is a controversial statement?
Conventional wisdom is that a PEG of 1.0 is a "fair valuation" for a growth company. Consensus earnings estimates used for growth, but you can just as easily use historic growth rates.
I personally like the PEG because it takes some of the emotion and volatility out of where people think P/E ratios "should" be, and it makes it easier to play with the impact of different growth rates. It does more to say which stocks are cheap vs expensive. To me, it says that Apple is still a great company to be invested in, but Google and Amazon might not be.
'Conventional' or 'fair valuation' according to whom? Why might 'P/E' be caught up with emotion while 'PEG' is not? The P/E already includes the 'expected growth rate', as I mentioned in an earlier post (Finance 101 says that Fwd P/E = 1/[rE-g], where g is the expected growth rate). You can play around with different growth rates or use consensus estimates or historical growth rates or pick a number or whatever (although, ideally, you should anchor 'g' to something line [Reinvestment Rate]*[ROIC]).
You may personally like it, and that's OK. Go ahead and use it by al means. But it's important to note that: (i) the PEG ratio has no real meaning unlike a P/E ratio; (ii) There isn't an iota of empirical evidence to support the claim that PEG greater than or less than one amounts to a hill of beans from an equity valuation standpoint.
PEG or whatever, you've been lately predicting Apple stock prices in a couple of different posts. That's perfectly fine, but you should be able to explain/interpret the metrics you're using, if you do bring them up.
I have NEVER predicted Apple's share price. Never. I have absolutely no idea what it's going to do and have never, ever suggested that I do. In fact just the opposite.
If there are only ~300,000 units, there are going to be a lot of unhappy people. I predict that there will be enough demand for around 1 million sold in the first week. Not good for product constrictions.
For the love of.. I'm not feeling up to looking for it but this is the same crap that was floating around at the iPhone lauch and they were wrong then, and I have no doubt they will be wrong now. Apple isn't going to screw up over a simple supply problem.
It has been reported by many resources that customers are not very happy with the initial price of $499.
On what planet? All the pundits I saw were yapping about how it would be a flop as it would be $700-$1000 and the only way they could get the price down would be to tie it with a contract with AT&T and subsidize it.
And we saw how accurate those reports were
All I heard for the few days after - in the tech press, no less! - was how surprised everyone was at the $499 price and how it was going to put pressure on everyone else.
Absolutely. Does anyone doubt that any new product from Apple or Nintendo won't have a restricted supply when they're released?
Heaven forbid the companies produce wildly popular and sought after products that have an inherit demand. Oh no, they are only successful by artificially restricting demand.
Yup, that worked oh so well for the Pre
Please, if 5 million people want an iPad on day 1, and Apple reasonably believes 5 million people want one, they are going to do their damnedest to have 5 million available.
Quote:
Here come the reports of outrageous prices on e-bay.
Yup, that's those profit taking bastards at Apple manipulating the market to get those above retail prices on Ebay...
Yeah, the 27" iMac that's number 9 and 10 on the Amazon top 10 list (trending up, BTW). Yup, the computer with those miserable four out of five stars in the reviews.
You are absolutely right, it's a complete disaster!
Apple is f'ing brilliant. Now they'll have lines of people showing up, "just to see if they can get one"
Yup, Apple will "have" lines of people. They will force them to come just because.
Not because it's an interesting, compelling or desirable product - but because it's the "Apple Trendy" thing to do.
Oh well, you did get one thing right - Apple is f'ing brilliant - they design products for customers instead of against feature lists! What a concept! Amazingly, focusing on the end user experience instead of technology for the sake of technology begets compelling and highly desirable products.
eh, display issues for Mac have been an hotly concern since the first aluminium iMacs.
Only for those looking for something to criticize Apple over.
Internet echo chamber any one? If the display issues were anywhere near as significant as you are implying- if they were even HALF as common as the Xbox 360 RRD, the anti-apple sites would be all over it. You need a new shtick, this one is so retreaded it's barely visible.
I am a huge follower of the iPad, untill i saw the launch. Now i'm waiting to see what the competition brings (i.e. Google Chrome OS Netbook). Screw MS/HP products. If the "Chrome-Book" fails expectations, then it's iPad 2.0 for me. Just not compelling enought to wait in lines. They need to put some kind of wireless home/office networking into the OS. Just put the "Finder" in it already!
I'm pretty sure they wouldn't put in 3G, wi-fi and bluetooth unless this thing had networking capabilities... Why does this device need the 'finder' any more than the iPod touch?
I feel I must point out how much more fun knee-jerk over the top responses are.
I guess I'm being so emotional about it because I'm still mad at the absolute failure of the 3Gs launch in Canada, how I couldn't get one for over six months despite phoning my carrier almost daily, and especially because no one in the media even reported the story (seeing how the USA had stock and that's all anyone cares about it seems).
So yeah, take my prediction with a grain or two of salt cause I'm obviously basing it more on the past failure than the facts. The fact remains however that Apple is having a horrendous time keeping up with supply during their transition from tiny also-ran US computer company to world-dominating retail behemoth.
I'd have to point out that your having to wait 6months for a phone doesn't make the phone a failure - Apple not being able to meet demand isn't great for a consumer waiting in line, but must make for a very healthy profit and appearance of success on Apple's part.
I've been reading constantly about Apple's 'problems' - every 27" iMac being faulty etc, etc, but I've yet to meet a real world user who has experienced an issue. It seems people just like to pick fault, a bit like the child labour report - commissioned and publicly distributed by Apple themselves - being taken out of context and used against them, when the report is nothing but a good thing and shows that Apple are being open, and trying to rectify the issue.
It just seems that people like to knock a success story, either out of jealousy, ignorance or simply the fact it's easier to criticise than to see the good points once in a while.
Comments
I'm not sure what you are implying. None of these so-called metrics predict anything. They have precise meanings in terms of how they are calculated, but very imprecise interpretations.
Who said anything about predicting (notwithstanding the fact that you guys were trying to earlier, making all the sweeping assertions about PEG tending to one and all that)? That's a fool's errand anyway.
I am talking about the meaning and the interpretation of a construct or a financial metric. I told you precisely what a P/E ratio means. I can precisely interpret a P/E ratio for you if you gave me the fundamentals - cash flows, growth, cost of capital, as I had previously mentioned - that drive value.
The point is, the PEG ratio does not lend itself to any such interpretation. And you seemed to have missed the point that there is no literature - other than casual press anecdote - to back up the use of that metric; I can create all sorts of metrics with price in the numerator, but that means nothing. Perhaps there is a reason that such literature does not exist.
Incidentally, back to my earlier question, what is the 'consensus' that you two were bantering about earlier?
Different folks use different methods of grouping. I suppose you are one that hates it when someone uses the "," (comma) for the decimal delimiter also (as is done in a large part of the world outside the US)? If it is equivalent who cares - not everyone does it the way us "good old yanks" do it!
First off, I am from the U.S. and could care less if someone says math or maths or uses a comma instead of a decimal point. The point the guy was making is that 1000x1000=1,000,000...one million, so why not just say one million. (This works I guess unless we use Japanese notation - 100 "ten thousands" - but that is unlikely unless you are Japanese or a Japanophile, like me)
Who said anything about predicting (notwithstanding the fact that you guys were trying to earlier, making all the sweeping assertions about PEG tending to one and all that)? That's a fool's errand anyway.
You must have missed the part where I made no assertions at all about what PEG is good for, let alone, any sweeping assertions. It's just another number, like all of the others, the meaning of which you must interpret in order to glean any value. If you think it has none, then by all means, ignore it.
You certainly like to use the word metric, but that's just one of those buzzwords that gets tossed around to make a statistic sound important and serious. This discussion is starting to sound like one of those debates some baseball fans love to have over which stats are the really meaningful ones.
I used the word consensus to describe how stock prices are set by the market at any given moment in time. Today the market consensus is that AAPL is worth $208 a share. Little doubt, a different consensus will emerge tomorrow. This is a controversial statement?
I have a couple of questions for you.
What is the meaning of the 'PEG' ratio (I know what the definition is; I am asking about its meaning and interpretation)? 'Consensus' of what? Earnings? P/E? PEG? If either of the latter, where you do you find that? What does a PEG ratio tell you that you could not glean from a P/E ratio? Finally, can you point to any credible empirical evidence that links PEGs to stock prices?
Conventional wisdom is that a PEG of 1.0 is a "fair valuation" for a growth company. Consensus earnings estimates used for growth, but you can just as easily use historic growth rates.
I personally like the PEG because it takes some of the emotion and volatility out of where people think P/E ratios "should" be, and it makes it easier to play with the impact of different growth rates. It does more to say which stocks are cheap vs expensive. To me, it says that Apple is still a great company to be invested in, but Google and Amazon might not be.
That is one way to create a fake demand.
Indeed. I better get my pre-order in ASAP!
Seriously though, when can I pre-order one
You must have missed the part where I made no assertions at all about what PEG is good for, let alone, any sweeping assertions. It's just another number, like all of the others, the meaning of which you must interpret in order to glean any value. If you think it has none, then by all means, ignore it.
PEG or whatever, you've been lately predicting Apple stock prices in a couple of different posts. That's perfectly fine, but you should be able to explain/interpret the metrics you're using, if you do bring them up.
You certainly like to use the word metric, but that's just one of those buzzwords that gets tossed around to make a statistic sound important and serious. This discussion is starting to sound like one of those debates some baseball fans love to have over which stats are the really meaningful ones.
Whether it's a 'buzzword' or not is simply a point of view. I simply meant it i the sense of a 'measure.' You can call it whatever you like. That does not change the substance of my questions.
I used the word consensus to describe how stock prices are set by the market at any given moment in time. Today the market consensus is that AAPL is worth $208 a share. Little doubt, a different consensus will emerge tomorrow. This is a controversial statement?
No controversy there at all.
Conventional wisdom is that a PEG of 1.0 is a "fair valuation" for a growth company. Consensus earnings estimates used for growth, but you can just as easily use historic growth rates.
I personally like the PEG because it takes some of the emotion and volatility out of where people think P/E ratios "should" be, and it makes it easier to play with the impact of different growth rates. It does more to say which stocks are cheap vs expensive. To me, it says that Apple is still a great company to be invested in, but Google and Amazon might not be.
'Conventional' or 'fair valuation' according to whom? Why might 'P/E' be caught up with emotion while 'PEG' is not? The P/E already includes the 'expected growth rate', as I mentioned in an earlier post (Finance 101 says that Fwd P/E = 1/[rE-g], where g is the expected growth rate). You can play around with different growth rates or use consensus estimates or historical growth rates or pick a number or whatever (although, ideally, you should anchor 'g' to something line [Reinvestment Rate]*[ROIC]).
You may personally like it, and that's OK. Go ahead and use it by al means. But it's important to note that: (i) the PEG ratio has no real meaning unlike a P/E ratio; (ii) There isn't an iota of empirical evidence to support the claim that PEG greater than or less than one amounts to a hill of beans from an equity valuation standpoint.
editss bad joke
PEG or whatever, you've been lately predicting Apple stock prices in a couple of different posts. That's perfectly fine, but you should be able to explain/interpret the metrics you're using, if you do bring them up.
I have NEVER predicted Apple's share price. Never. I have absolutely no idea what it's going to do and have never, ever suggested that I do. In fact just the opposite.
If there are only ~300,000 units, there are going to be a lot of unhappy people. I predict that there will be enough demand for around 1 million sold in the first week. Not good for product constrictions.
For the love of.. I'm not feeling up to looking for it but this is the same crap that was floating around at the iPhone lauch and they were wrong then, and I have no doubt they will be wrong now. Apple isn't going to screw up over a simple supply problem.
Are we sure this guy isn't shorting Apple?
Whatever the issue, this is not likely to get better. I think we'll have to see other areas of Apple's product line expand to deal with this growth
The same people criticizing Apple for production problems also want the iPhone on Verizon.
Am I the only one that sees the disconnect here?
It has been reported by many resources that customers are not very happy with the initial price of $499.
On what planet? All the pundits I saw were yapping about how it would be a flop as it would be $700-$1000 and the only way they could get the price down would be to tie it with a contract with AT&T and subsidize it.
And we saw how accurate those reports were
All I heard for the few days after - in the tech press, no less! - was how surprised everyone was at the $499 price and how it was going to put pressure on everyone else.
Your analysis is all wet...
Do. Not. Want. In fact, after the multiple iTunes debacles and the AT&T iPhone lock-in, I don't ever want ANY Apple product.
So why are you here? Was that cathartic? Do you feel better? Want a cookie?
Absolutely. Does anyone doubt that any new product from Apple or Nintendo won't have a restricted supply when they're released?
Heaven forbid the companies produce wildly popular and sought after products that have an inherit demand. Oh no, they are only successful by artificially restricting demand.
Yup, that worked oh so well for the Pre
Please, if 5 million people want an iPad on day 1, and Apple reasonably believes 5 million people want one, they are going to do their damnedest to have 5 million available.
Here come the reports of outrageous prices on e-bay.
Yup, that's those profit taking bastards at Apple manipulating the market to get those above retail prices on Ebay...
Oh, wait...
Yeah, like the new 27" iMac...
Yeah, the 27" iMac that's number 9 and 10 on the Amazon top 10 list (trending up, BTW). Yup, the computer with those miserable four out of five stars in the reviews.
You are absolutely right, it's a complete disaster!
Apple is f'ing brilliant. Now they'll have lines of people showing up, "just to see if they can get one"
Yup, Apple will "have" lines of people. They will force them to come just because.
Not because it's an interesting, compelling or desirable product - but because it's the "Apple Trendy" thing to do.
Oh well, you did get one thing right - Apple is f'ing brilliant - they design products for customers instead of against feature lists! What a concept! Amazingly, focusing on the end user experience instead of technology for the sake of technology begets compelling and highly desirable products.
Who would have thunk it?
eh, display issues for Mac have been an hotly concern since the first aluminium iMacs.
Only for those looking for something to criticize Apple over.
Internet echo chamber any one? If the display issues were anywhere near as significant as you are implying- if they were even HALF as common as the Xbox 360 RRD, the anti-apple sites would be all over it. You need a new shtick, this one is so retreaded it's barely visible.
I am a huge follower of the iPad, untill i saw the launch. Now i'm waiting to see what the competition brings (i.e. Google Chrome OS Netbook). Screw MS/HP products. If the "Chrome-Book" fails expectations, then it's iPad 2.0 for me. Just not compelling enought to wait in lines. They need to put some kind of wireless home/office networking into the OS. Just put the "Finder" in it already!
I'm pretty sure they wouldn't put in 3G, wi-fi and bluetooth unless this thing had networking capabilities... Why does this device need the 'finder' any more than the iPod touch?
I feel I must point out how much more fun knee-jerk over the top responses are.
I guess I'm being so emotional about it because I'm still mad at the absolute failure of the 3Gs launch in Canada, how I couldn't get one for over six months despite phoning my carrier almost daily, and especially because no one in the media even reported the story (seeing how the USA had stock and that's all anyone cares about it seems).
So yeah, take my prediction with a grain or two of salt cause I'm obviously basing it more on the past failure than the facts. The fact remains however that Apple is having a horrendous time keeping up with supply during their transition from tiny also-ran US computer company to world-dominating retail behemoth.
I'd have to point out that your having to wait 6months for a phone doesn't make the phone a failure - Apple not being able to meet demand isn't great for a consumer waiting in line, but must make for a very healthy profit and appearance of success on Apple's part.
I've been reading constantly about Apple's 'problems' - every 27" iMac being faulty etc, etc, but I've yet to meet a real world user who has experienced an issue. It seems people just like to pick fault, a bit like the child labour report - commissioned and publicly distributed by Apple themselves - being taken out of context and used against them, when the report is nothing but a good thing and shows that Apple are being open, and trying to rectify the issue.
It just seems that people like to knock a success story, either out of jealousy, ignorance or simply the fact it's easier to criticise than to see the good points once in a while.
Loving my 27" iMacs.