Keith,
You say, If the 500 times cash flow would have bothered the person purchasing AOL, then the purchase never would have been made to begin with.
I agree completely--indeed, you state a variation on my point. Most of the people who own AOL are letting greed overpower judgment, finding justifications for buying it simply because it's moving up. Many of these Momentum Morons will wind up breaking Captain Kirk's Prime Directive of investing, i.e., don't lose money.
IOW, if they are momentum investors, who pay no attention at all to fundamentals, they should exit as soon as there is even a hint the momentum has faltered. With AOL the hint has been going on for weeks--flat to declining prices. If they invest on fundamentals, then I suppose they should sit around and hope the fundamentals catch up with the price in their lifetimes. (Personally, I think they will, eventually.)
Best,
--Steve |
