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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 222.69

+0.1%

3:59 PM EST

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To: GST who wrote (81005)	10/18/1999 2:50:00 AM
From: Randy Ellingson	Read Replies (2) of 164684

GST- Almost always this has been the right judgment. However, the decline in recent years in the equity premium--the margin by which the implied rate of discount on common stock exceeds the riskless rate of interest--should prompt careful consideration of the robustness of our portfolio risk-management models in the event this judgment proves wrong. >>THE ABOVE PARAGRAPH IS KEY: HE CLEARLY SAYS HERE THAT THE STOCKS ARE OVERPRICED. HE IS SAYING FLAT OUT THAT HE DOES NOT BELIEVE THE MARKET HAS PRICED IN THE RISKS OF OWNING STOCKS.<< Not! His wording is such that "this judgement may prove wrong"; he does not opine that it is wrong. The entire speech, which I realize you have read as well, discusses risks, risk premiums, and the reduced risak premiums which have accompanied improved information accesibility. Naturally you attribute his speech to his beliefs that the current stock market valuations are inappropriately high. He would have a tough time writing a book on why MSFT stock price is too high; he would have a tougher time writing the same book on Yahoo. Randy

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