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Strategies & Market Trends : Roger's 1998 Short Picks
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To: James Yu who wrote (11155)7/8/1998 8:30:00 AM
From: Roger A. Babb  Read Replies (5) of 18691
 
James, every year there is a new class of companies to which normal valuations supposedly no longer apply, unnecessary for them to have earnings or even revenues. Last year it was y2k, this year it is Internets. Of course financial reality is not repealed and eventually standards are applied. The floor of Nasdaq is littered with the remains of these "concept" companies.

The argument is now made that Internets should be valued based on hits. In my 32 years of investing I have seen many such new paradigms, but in all cases it eventually boils down to old fashioned earnings and a PE somehow related to the interest rate. It will happen to the Internets too, the value is in earnings. "Hits" and "brand name" and "web real estate" have value only in their ability to produce earnings.
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