DOW 36000 - Glassman and Hassett Message Board

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Pastimes : DOW 36000 - Glassman and Hassett

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To: Sid Turtlman who wrote (29)	12/20/1999 9:14:00 AM
From: noiserider	Read Replies (1) of 42

Hi Sid, <<Who said that bond money is cheaper than stock money? It is not - it is the exact opposite. Why would an internet company want to borrow at a junk bond rate, which would reflect its lack of any prospect of profitability for years to come, when it can do an IPO at 500 times hoped for earnings 5 years hence? >> I think it's important to separate out the current internet mania from G&H's focus on the total market. Agreed - the cost of capital for many internet stocks is zero. But the cost of capital for all the companies in the DOW (and I believe the S&P 500) is not. Further, G&H shy away from internet stocks by saying "Our own bias, however, remains with companies whose earnings we can count-and count on." I gather from your recent posts that your explanation for the stock market rise is "irrational exuberance". You may be right, however, I'm still interested in exploring G&H's theory. "Why in the world would I want to contact a symptom?" To see if they can answer your well thought out objections. I'll let you know if I get a response.

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