Thoughtful points, Bob D. Let's look at "metrics"--
I'll take a crack at responding:
These stocks go up (and, for the most part, stay up) because demand for them exceeds supply. There is no other reason.
Net stocks will remain darlings, barring
1) elimination of all margin across the Net (controversial and discriminatory, but allegedly under consideration), or
2) an adverse change in fiscal or monetary policy, and
3) subject to world economic noise (e.g., Brazil, which means nothing to the Net, etc.), there is no chance that this "bubble's" gonna bust any time soon. In fact, Brazil's predictable blowup--in the wake of Asia's continuing drag--will almost certainly force Greenspan to cut rates again in the next few months. He's apparently trying to talk down "asset prices" in preparation. Greenspan knows what he has to do to support banks and weaken the dollar (in part, to protect exports).
I'm not saying there won't be volatility. There will be. But income stream valuation will become a relevant metric for the Net only when supply dictates that it must. For now, the name of the game is how much a *user* is worth. To ATHM (and in turn, to T), the answer is $400 a head for XCIT. To Hughes (GMH), who's bidding for Primestar, it's $800 a pop. To YHOO, the market cap recently said "$1,000." What's a GNET user worth?
There's a ton of cash out there, and nowhere for it to go. The Net investor base is broadening. Joe Sixpack is now asking his broker, "What Internet stocks should I buy?" The perennially under-performing mutual funds are barely represented on Net stockholder rolls. Investors won't stand for this in light of a dramatically shifting economy. Watch the S&P 500 for the inclusion of AMZN and YHOO. Watch the Dow for the inclusion of...AOL.
Notice, "value" stocks and small caps have done next to nothing since October. The rust-belt is dead. Amazing. Tech remains the only winning hand.
I'm not gonna argue with you about "young Turks" with whom you come into contact. They're probably playing a dangerous game, and the recent Net selloff certainly attests to the triggering of stop loss/stop limit orders and a spike in margin calls. But this will prove a short-term phenomenon. Weakness will continue to be met with buying power.
For many stocks, including GNET, the imminent wave of industry consolidation is gonna provide a foil for a whole body of junk science that might otherwise kindle skepticism.
Is AMZN now overpriced? Alan Abelson of "Barron's" thinks so. But he also thinks AMZN is just a book/record store. He always has! So once again, it's Conventional Wisdom vs. the Big Picture.
You mention new price-seeking technologies. Thus, I ask you, is Priceline.com gonna trade at a premium on IPO day? You bet your UPS battery it will! And this is the point. The demand for what *makes a difference* on the Net far exceeds the supply of *solutions.* Perhaps that won't help the ZAPs or KTELs, but that's not my fault. As ever, you need a 'Man with a Plan.'
As to GNET, there's nowhere to go but up. After all, isn't that why Auric G. is shorting it?!
To be continued...
Comments, anyone?
BAM
Disclosure: Long ATHM, GNET and T; no position in others mentioned.
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