America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: Brent D. Beal who wrote (6502)	12/18/1997 1:07:00 PM
From: steve lipson	Read Replies (2) of 13594

Seasons greetings to you as well Brent. I was only trying to share some heart-warming stories for the holidays. Unfortunately, I can see your mood is much too sour to be cheered in that way. Have you considered therapy? It might help you work out some of your frustrations about having failed so utterly to predict AOL's price movements despite your unbelievably thorough analysis of its P/E (it's like really, really high man) combined with your keen grasp of investment and business history (once there was a tulip mania, I'm sure this is the same thing happening all over again). In further observance of the season I have a parable for you. Brent (not his real name) bought a lotto ticket. The jackpot was to be a $1 million. When the lotto drawing started the first number picked matched one of the six Brent had picked. So did the second number and the third. Then the fourth and fifth numbers were picked, and they too matched those on Brent's ticket. At that moment Steve looked over Brent's shoulder and saw what was happening. That's some ticket you've got there, Steve said. If you want to sell it before they draw the last number I'll buy it from you for $100. Brent thought and thought. How could a ticket that once cost a dollar now be worth $100. I know, he said, the earnings must have increased by a factor of 100. So he asked Steve, did they increase the jackpot of this drawing to $100 million. No, Steve said. Brent got out his calculator to figure out the P/E if someone was willing to pay $100 for a lotto ticket that at this moment wasn't earning anything -- since the drawing hadn't even been completed. The numbers went right off the screen of his calculator. That's it, he thought, that guy must be the biggest idiot in the world and I'm too smart an investor not to take advantage of that. So he sold his ticket to Steve.

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