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Technology Stocks : AUTOHOME, Inc
ATHM 23.05-2.2%10:40 AM EST
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To: E. Davies who wrote (11691)6/23/1999 10:23:00 PM
From: ahhaha  Read Replies (1) of 29970
 
You answered the question when you used the term "overvalued stocks". Most stocks are trading 2 times their future expected growth rate. That isn't rational. The valuation got there because the FED let it. Now they have an economy consequence for their benevolence. They gotta knock it down. It was the FED who let psychology get 'em up, and it is the FED who will have to change psychology to get 'em down.

ATHM will be trading at an infinite multiple, that is, when they climb up to break even. The whole ball game is infinite horizon on permanent prosperity. Therefore, if a large enough crowd can accept this thesis, ATHM's price will go to indefinite levels. When there is no solid criteria upon which to judge valuation, it is up to whim. As long as the crowd is getting lots of money to keep the party going, pricing is whimsical. This era knows practically nothing about interest rates, but enough know that it ain't no joke. Whim crashes.
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