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: J. P. who wrote (11602)	10/27/1998 6:18:00 PM
From: Bill McCullen	Read Replies (1) of 13594

JP Nice reply. What set me off on your other post was your split = fourfold gain comment. I am not opposed to investing in high PE stocks that have proven growth track records or unusual circumstances (i.e. MSFT is a monopoly for now and the foreseeable future that has $10+ billion cash on hand so maybe it is worth 60 times earnings). My largest holdings are LU, EMC and CSCO so I do OK. But at some point, AOL, YHOO, ebay etc. are going to stumble and someone will be left holding the bag and it won't be me. The risk/reward for these stocks is very high. Interesting you cited LTCM since that fund generated outsized returns for several years when all was good then crumbled when things went sour. Why, because they generated outsized returns with an extroardinarily risky model. Their risk adjusted returns probably wouldn't have matched a portfolio of utilities let alone the S&P. I think the same might be said for many of the Internet stocks. Also, I don't short and I'll admit I missed the boat on Dell and still feel it is very over-valued. I will make a note to check back in 6 months, it will be fun to see where AOL is (split adjusted of course). Regards, Bill

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