<Sal made the point of ascribing internet tier 1 to those internet plays which, after the ' speculative bubble' burst would suffer the least, in stock price correction.In the context of Sal's placing Yahoo in the 1st tier at well over $100 and Netscape in the $ 20 range,in tier 3, which stock has the most to lose for investors, at this juncture? If its yahoo, doesn't Sal have it backwords?>
Your logic is way off. If Yahoo at $100 per share had a 100 for 1 split, does that make it any less risky? Risk is not quantified in terms as simplistic as share price, or what goes up must come down. If that was the case, Investment banks would not require MBA's and PhD's from thier bankers and engineers, high school would do. The prevailing wisdom of what would predicate a large drop (ex. risk or deviation from expected return) in Yahoo's or NSCP's share price given a sharp move in the market is their historical volatility or predictive beta, depending on which school you cast yourt shells to. Volatility is just that, and beta is share price volatility as regressed against a large body of stocks such as the S&P 500 or the NYSE comp. If NSCP has a beta of 2 and yahoo has a beta of 2 yet yahoo consistently outperforms NSCP than yahoo is the better investment.
Using the logic ascribed to in your post, penny stocks should be the least risky of all equity investments, since they are closest to absolute zero in share price.
You guys should come by my website a little more often:-) |
