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One would think so, however, in early 1997 when SFE bottomed at around $17 [and PE's of NAV's were maximally compressed, SFE traded at a discount to NAV of a dollar or so. This, just when risk was lowest and potential reward highest. Yet when it peaked out in the mid 40's in '96 and '98 it traded at a high premium to NAV, just when the PE ratios of it's holdings were very high, and when the reward/risk ratio was poor [excessive enthusiasm]. That is what is perplexing and somewhat disturbing about what we discussed earlier in the week with a 20% premium after a big decline. Does this imply to much enthusiasm present to mark a possible bottom and eventually sentiment will have to get washed out enough to let SFE fall to its NAV? What are the implications if this bear market drags on and SFE has to keep deferring rights offerings until market conditions improve? Is there enough recognition of their stake in internet private companies that the premium will remain? [the only enthusiasm lately seems to be for internet, gold, and Dell! Does SFE have any private holdings in gold companies we don't know about? Wishful thinking. What do sellers know or think they know to tank DTPI from $18 to $10 in two trading days. Ouch. Finally, regarding the long term charts of the DOW and NASDAQ. They should not be interpreted in a positive or negative light regarding the future. A bear would argue that they are similar to a chart of the Japanese market a year after its peak at 38,000 on its way to 13,000 9 years later. A bull would argue that the last 2 months is just a hiccup in a long term bull market. Not sure who is right, but the feeling I have gotten lately is more indigestion than hiccup. |
