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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 230.84-0.7%3:59 PM EST
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To: GST who wrote (134939)11/18/2001 10:25:20 PM
From: Bill Harmond  Read Replies (1) of 164684
 
I'm not a formula investor. In some cases I look at valuation issues. Some cases I don't need "p/e permission".

I have stocks now that exhibit one or the other. I have stocks like UT Starcom where profitibility is unquestionable, visibility is great, and the market opportunity is huge. I guess I could put everything in UT Starcom, but that doesn't seem too prudent. Some guy in China may get a burr up his butt, and I blow up.

I have many others where I'm willing to discount profitability farther out than the market does. The risks and rewards are far higher in the latter category, and inevitably some can fail, but that doesn't scare me personally because the home runs can swamp the losses. It's the way I am. To each his own. I've learned that P/E ratios only matter in mature businesses.

I'll tell you a story I related here a few years back. I was at the first Tom Siebel presentation at Montgomery years ago, must be five years now. Great story and great presenter, obviously. As we were filing out the door I said to my friend, "Gee. Just think. That company has a higher P/E than Netscape!" A senior fund manager behind us tapped me on the shoulder and as I turned around he said, "The estimates are low."
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