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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 244.41+0.6%Nov 7 9:30 AM EST
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To: Glenn D. Rudolph who wrote (103688)5/19/2000 11:18:00 PM
From: Sarmad Y. Hermiz  Read Replies (1) of 164684
 
>> Who decides what is the wheat and what is the chaff?

Glenn,
Obviously each person decides for himself (and now that the ladies are not posting, I guess there is no need to add "or herself"). But there is also an objective measure. Lets take a stock that earns $5/sh. pays $2/sh dividend, a P/E of 5 and a book value above the share price. My investment bet is that it will be left standing and prospering regardless of whether the new econ boys buy it or not. It also does not depend for its survival on whether some pimping analyst touts it or not.

On the other hand take an idiocy like efax, or ivil or maybe a hundred others. Or maybe an intelligent concept driven up to absurd levels like eeln (in its heyday), yhoo, ebay or even msft or csco. If you owned the whole thing you'd go broke, because it doesn't earn enough to finance the loan you would need to buy it. So the only hope is to palm it off on a greater fool.

Well in a down market, the latter category will go down. The question is will they recover ? My investment bet is that the ones who can continue in business regardless of their stock price will recover, and the ones who need a high share price as fuel to sustain their burn rate will be left aside and forgotten. Like mstr or pilt.

So about the wheat and chaff. The wheat gives fruit (business profits). The chaff does not. The subject of this thread is like that.

I'm sorry if I rambled on too much. I'm sure KIS has explained it better on numerous occasions.

Regards,
-Sarmad
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