Dave,
Thought I'd join you fellow migrants from the YHOO thread. The discussion there has been more active lately but there sure is a lot of garbage to wade through, too.
I don't think Bre-X is a good example, although as you know from my posts on the YHOO thread lately I am hardly convinced that YHOO is "really" worth all this money at this point.
It is not unusual, even in the long run, for stocks to enjoy a significant PE and PSR premium over competing stocks. MSFT and CSCO are two present examples in the tech. sector. In other sectors you have KO and GE enjoying premiums because for the most part they have shown spectacular abilities to consistently deliver earnings growth despite their large sizes (MSFT and CSCO have shown that too, just not for as long). In younger non-tech. companies, HD (Home Depot) is a good example (PE of about 50 in retailing, in part because of category dominance, in part because of the growth and in part because the growth has been consistently powerful).
Bre-X is more like K-tel: there was nothing there to begin with, and it just took awhile for speculators to notice or find out. With Yahoo!, there is DEFINITELY something here, but so far it sure doesn't look to me like it's as big as the market is saying it is. And in the meantime, the premium YHOO is enjoying is way bigger than anything else out there (except maybe AOL, to which many of the same arguments apply).
MAD DOG
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