Happy Girl,
Well, we're (er, I mean you're) up another 13 or 14 dollars (make that 22 or 23 -- went up almost 10 as I was writing this!) per share today, so both herds are on the stampede: yours on the way to riches and a validation of your reasoning; mine just so we can stay close enough to see where yours is headed.
I agree that this is not Tulipmania. Although the Galbraith book I quoted awhile back does use Tulips as its first example, there is a clear difference: Tulips really had no intrinsic value; they were what I would call a pure fad, the Beanie Babies of their day. Their value is based on whether people like to look at them, and tastes come and go. The Internet, on the other hand, is a valuable tool to help us accomplish our daily business and enhance our enjoyment of the world. (Today alone I have used it to find some legal reference material that in the old days would have taken hours or days in a dusty library. I have also used it to hear others discuss topics of interest to me, discussions I would have had no access to without the Internet. And I used Yahoo for both.) So I very definitely agree with you that Yahoo is not the tulip craze.
Galbraith's book contains another example, though, that may turn out to be applicable. I don't have the book with me, but it has to do with one of the first (maybe the very first, I don't remember) U.K. joint stock companies. The company had exclusive government permission some hundreds of years ago to ply the transatlantic shipping lanes. The investing public reacted enthusiastically, reasoning that (1) this was a great new market opportunity that this company appeared poised to dominate; and (2) the stock in the company was a new financial device that let the investing public come along for the ride. A paradigm shift, if you will, in two ways: new potentially huge industry and new financial instrument.
Things went real well for awhile, and the early investors reaped phenomenal returns. But the government permission did not prevent other countries' shipping companies from plying the same routes. This competition's success ultimately made the British company less successful than expected and broke the speculative bubble, and the equity price plunged faster than it had risen. Even though a great new thing -- large-scale transatlantic shipping -- with huge economic benefits had been born.
Maybe YHOO, which unlike the British company has earned its dominant portal position, will successfully beat back the competition. They have so far. But only time will tell. And by pricing YHOO at $200 or $300 a share, you longs are essentially saying that nothing will go wrong, because if something does go wrong the herds (both of them) will move on, yours to other stocks and mine to the next spectacle we don't understand but can't take our eyes off of.
But in the meantime, I'm sure everybody would rather be in your herd than mine. Congratulations.
MAD DOG |
