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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Allan Harris who wrote (6913)	7/18/1999 8:02:00 PM
From: Justa Werkenstiff	Read Replies (2) \| Respond to of 15132

Alan: Re: "Wrong again. Drop the martyr complex, you're better then that." No martyr here, Alan. I am just not having as much fun doing this anymore. That is a fact. Re: "I have shown you no disrespect and my participation on this thread and in particular dialogues with you show an abundance of respect and appreciation for your contributions to this discussion." You are right. But you are going to have to accept my wishes as it pertains to this thread. It is a core belief for me. You can disagree but I am sorry but that is the deal. It is a take it or leave proposition. Re: "He mislead. That's the big deal. He selectively picked a few stocks that were laggards and led his national audience to believe that the market was making new highs while leaving the Internet sector behind." I don't get it. The sector has been left behind exactly because it has not made new highs. This is Brinker's point. You mislead too for that matter because you picked some stocks that have done well. Re: "We here on this thread have shown that in reality the Internets as a sector have been outperforming the general market during this rally." Oh come on. Of course, the nets will lead the general market out of a correction because the sector has the BETA blast factor and the general market has thousands of stocks. But the nets overall have not made new highs along with the general market. That is Brinker's point. And for any trader or investor, this is a big warning flag. Re: "It's called honesty and it is a big deal." Sorry, Alan. Go back to the show and give me the real audio reference and I will listen again. As I have said, Brinker would be better served to focus on an internet index as you would be as well. It narrows the argument. But to conclude that Brinker is dishonest on this point is a real stretch IMO.

To: Allan Harris who wrote (6913)	7/18/1999 8:20:00 PM
From: Carl R.	Read Replies (2) \| Respond to of 15132

Re: Internets It is true that the indexes which I follow have reached new highs, while the DOT index is still about 20% off its highs. On the other hand that is not to say that they have not rallied substantially from their lows. It simply indicates that they as a group are still in a downward trend. It is true that you can look at certain sub-sectors, such as DSL, and find that they are closer to their highs than certain other sectors. It is also true that you can find individual stocks that did make new highs recently. But if you look at the overall sector, the overall sector did not make new highs. Thus I would be more inclined to agree that Bob's characterization is accurate than yours. Probably the correct analysis is somewhere in between, as in, "they have rallied substantially, but are not making new highs". I for one believe that it will be 5-10 years before the DOT index eclipses its April highs, perhaps more. I expect continued volatility, with dramatic moves both up and down. I expect that there will be individual stocks that do well, and individual stocks that do very, very poorly. But if you track the index, I believe that the overall trend will be sideways to down for awhile. This is because all internet stocks were very, very highly valued. Eventually the ones that deserved such a valuation will stand out, while many others will reveal that they were overvalued. The ones that rise will not be able to make up for the laggards, and the index will continue to fall. As an example of high valuations, let's look at the DSL service providers, RTHM, COVD and NPNT. All have market caps of $4.7 billion. Are they all worth the same? Will they all grow at the same rate? Will they all be equally profitable? Certainly none have any sales that currently justify the valuation (RTHM has a PSR of 3700). Certainly they will all grow rapidly, and eventually may achieve profitability, though profitability is not expected for years. But in time one may outperform the others, or perhaps all will do well or none will. A tremendous amount of growth expectations are built in at the current price level, and therefore the potential exists for dramatic disappointment. In the end these companies will all be valued by traditional sales metrics, PSR, growth rates, and profitability. The next year or two will see a major shift in valuation from pure hype and speculation, to more sound valuation methods. Some companies will provide pleasant surprises for stockholders, while others will see some major disappointments. But as a group, I expect to see the index continue to move sideways to down. Note that this argument is not based on a radical shakeout, which could happen. Some sectors such as ISPs have achieved combined penetration in the range of 50%, which is typically a time of shakeout and consolidation as growth rates begin to slow. This sector is also facing actual potential declines from losses of customers to broadband alternatives. I will continue to select a few internet stocks for my portfolio especially for short term trades, but as a group I would recommend caution to more conservative investors. Since Bob does not recommend short term trades for any investors, I don't expect him to change his opinion. My one long term internet holding continues to be AXC. Carl