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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 21 4:00 PM EST

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To: Jon Stept who wrote (14882)	5/25/1999 3:36:00 PM
From: j.o.	Read Replies (1) of 99985

OT** Jon, I will address this, if I may: I believe that Donald accurately assesses the internet companies' long-term chances of failure. He points out one crucial point - that there is a false perception on behalf of the public that every company that sells something on the internet will do so efficiently, and will survive over time. Many of the companies going public are not even worth looking at from a rational business perspective. Yet investors hunger for them, and entrepreneurs will bring them to market. There is such a MASSIVE incentive to create an internet company (whether well-founded or not) and take it public that the supply of these companies far exceeds the natural demand for their services. Yet investors throw money at them, and pay for the "future earnings" that will never materialize, because there is too much competition. This game continues until the pyramid scheme finds no new building blocks (i.e. exuberant investors). Investors misconceptions about future growth potential and market dominance lead to an "inefficient market". And it will produce an amazing number of "dead" investments. $1bil companies whom no-one remembers in 4 years time...just about when they "projected" to have 5 million customers and dominate the whichever "space" they occupied. They are doing well now...in terms of raising capital - but for many that is the only "success" they will ever experience. Ohhh, but isn't it fun to dream! j.o.

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