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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 244.68+2.6%Jan 27 3:59 PM EST
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To: Bill Harmond who wrote (86846)12/9/1999 2:35:00 PM
From: Eric Wells  Read Replies (2) of 164685
 
I said Yahoo's market opportunity is incalculable,

William - I would argue that there are many stocks in this market that are priced using the same logic - and this was the point I was making (I was not trying to marginalize your words).

The problem that I see with the price of YHOO and many other internet and b2b stocks, is that investors are focusing on the best case scenario for future profitabilty - and the best case scenario gets better and better all the time (with every stock price target increase). There is very little consideration given to the worst case, or even the likely case scenario. Technology changes so fast that there is a likelihood that new technologies might be introduced in the next few years that might have a severe negative impact on any competitive advantage that Yahoo may currently enjoy - and new technologies may allow other strong competitive forces to arise in areas that we cannot fathom at the moment. But investors ignore all this. In truth, as fast as Yahoo has risen, it could fall.

You could say that I'm focusing only on the negative - but I would say you are focusing only on the positive. And there's some middle ground where the stock should be priced - and YHOO is not there (it is way to the positive side at the moment).

Reading these message boards and watching the analysts on CNBC, one rarely hears about the worst case scenario or the likely case scenario. And I would claim it is irresponsible of any analyst to ignore the worst and likely case scenarios, and to focus only on the best.

Thanks,
-Eric
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