How To Select The Right Stocks At The Right Time(10)

Watching For Pitfalls(2)

Would you have purchased these "high" P/E stocks?


Stock P/E Ratio before advance

Amgen 300 (Up 650% in 22 months starting March 1990)

America Online 205(Up 557% in six months starting October 1998)

Mindspring 157(Up 237% in five months starting November 1998)

Ascend Communications
49 (Up 1,380% in 15 months starting August 1994)

MCI Communications
42(Up 266% in 17 months starting April 1988)

If you weren't willing to pay the higher P-Es, you eliminated some of the best stocks of all time.

Myth: It's better to get into an unprofitable company's stock before the company turns around and other investors discover it.

Again, studies tell you established companies that can't make much money for themselves can't make much money for investors.

Even in late 1990s, when it seemed any stock with a dot-com name could surge without the slightest hint of profitability,

a track record of good earnings growth still won the day.

Research has shown most Internet stocks with earnings growth outperformed their counterparts posting losses.