> Would you call EBay a Ponzi scheme ?
No, I would call Ebay a moderately successful online auctioning business. It makes no more profit than a large dry-cleaning operation in any major city.
I would, however, call its stock price a ponzi scheme. Or more correctly, a pyramid scheme.
A company's stock price should be equivalent to their earnings potential over a reasonable period of time. (10 years, 20 years, etc)
Subtracting the amount of interest an equivalent investment in government bonds would gain, of course.
Once the net companies established a trend of complete disconnection from underlying value, the pyramid starts growing. Like the previous poster said, if AOL is overvalued at 150 billion, what's to stop it from going to 20 trillion? After all, the share price represents nothing whatsoever about the company's business revenue or profit.
Let's all just keep buying the stock, and if we all promise to only sell a share after it has gone up 5 points, then we'll all be rich as bill gates in short order. Right? Isn't that how capitalism works?
>They are essentially destroying the newspaper classified ad biz which is
>highly profitable for newspapers. How much is that worth ?
Well, we all know that Amazon's market cap is more than the total of all books sold in the US per year. (And about 15 times the annual profit on all those books)
I'll take a guess and bet that total value of all classified advertising in papers is less than Ebay's market cap. But in a mania, why bother with such mundane concerns? Furby's to the moon! |
