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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 220.66+1.6%Nov 21 9:30 AM EST
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To: Eric Wells who wrote (81764)10/27/1999 8:27:00 PM
From: GST  Read Replies (2) of 164684
 
Eric -- the more I look into the underlying theory of options, and the role of risk in seeking potentially high but uncertain returns, the more I become convinced that net stocks are valued as options and not as stocks have been in the past -- at least not the ones with more predictable prospects. I think this explains a lot of the 'valuation' issues -- i.e. why net stocks have such oddly high valuations. But if the potential returns are seen to become more limited, the option drops dramatically in value -- these indeed supremely risky, which is why so many advise owning a bunch of them rather than just a few. Perhaps my concern with net stocks has been somewhat misplaced. As options, these investments make sense -- if you undersatnad and can manage the risks. My lingering concern -- the one I blat on and on and on about -- is with overall market valuation, which is why I so often refer to things going on beyond the net stocks. But I cannot really say for sure how I think net stocks would perform if the whole market takes a dive. My assumption has always been that they would feel the pain far worse than others -- and I still think that is true. BTW -- I am heavily net short and developed a migraine today when the market did an end of day rally.

Later
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