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To: 10K a day who wrote (74196)	8/17/1999 1:27:00 AM
From: Eric Wells	Read Replies (2) \| Respond to of 164684

A Red Hat Tale: On Saturday, I received a phone call from a good friend of mine - halfway through our conversation, she informed that on Friday, she had purchased several hundred shares of RHAT. My jaw nearly hit the floor when she informed me of this investment. You see, I would not characterize this friend as a "speculative investor" - she is not like some of those on this thread who apparently have a few million and have no qualms about throwing ten or twenty thousand after something as risky as RHAT to see where it might go. No, she is not like that at all. When I inquired as to why she purchased RHAT, she informed me that she had read very positive articles on Red Hat on MarketWatch and Yahoo (Reuters). I informed her of the very speculative nature of the stock - how many were planning to get in and out quickly to take a quick profit. I explained to her what it meant to have a "small float" and how that might impact the volatility of RHAT. I also informed her that despite all the very positive press that Red Hat has received, the company had a very questionable business model - that there would likely be many competitors in the Linux market, and it was very uncertain how they were all going to make money, much less if Linux would even do much to challenge NT's market share. By the end of our conversation, I had convinced her to sell her RHAT stock immediately upon market open this morning - which luckily she did, for after market open, RHAT proceeded to decline, closing down 10.75 for the day. I reiterated to my friend that even after she sold the stock that because of the speculative players that the stock might actually go up - as much as 50 or 100 points - but that the risk was enormous - that it could just as well drop 50 points. She agreed that selling was the best approach. This evening, I did a search for news articles on Red Hat - and nearly every article I found was very positive on RHAT, touting the benefits of Linux and the revolution that companies like Red Hat were going to bring to the server market. Only one article made any mention of the fact that RHAT's stock price was, perhaps, a little high - that it might be difficult to justify a $5.7 billion market cap. And then, after reading some of these articles, I got to thinking - you know, there are probably a lot of individual investors out there that understand very little about floats or speculative plays or market caps that read articles on MarketWatch or TheStreet.com that glorify companies like Red Hat or MP3 - and then these investors go out and purchase the stocks of these companies and proceed to lose large sums of money. And I have to ask myself, what is going on here? It's true that each investor is ultimately responsible for their own foolish investments. But why is there no major media outlet that is calling into question the extremely high market values of companies like Red Hat? -Eric