Valuation still counts. Fundamental to valuation is growth rate. Do the internet stocks and the qcom, sdli, nt, cnxt, brcm, jdsu, hlit, etc. deserve the speculative run up. Probably. The growth is there - even if the earnings are not. Buying and holding takes a certain amount of faith.
But, obviously, one can't simply extrapolate those stocks current growth rate indefinitely into the future. At some point the growth slows despite, or perhaps because of, perfect execution by management.
You mention other factors affecting stock price, I think one can characterize these as noise, though they may significantly effect stock price for a relatively short time period. These only have significance if one has a short time horizon. Personally, I pay no attention to them.
In regards to AOL, it will take faith to hold on to the future - because the subscriber growth period appears to be ending - this is not to say there aren't other opportunities to exploit. As you say AOL is still evolving. |
