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To: Chuzzlewit who wrote (7331)	12/4/1999 4:54:00 PM
From: Mike Buckley	Read Replies (1) \| Respond to of 9068

Chuzzlewit, I think there is a fallacy in that argument. I think so too. I wasn't offering the scenario as a good reason for the high valuations. Instead, I was offering it as a partial explanation of why it's happening. I especially liked your comment that cash flow (I assume you would narrow it down to free cash flow or at least operating cash flow) is what it's all about, not earnings. But you won't find any explanation of the high valuations in cash flows of any kind because very few investors have the slightest idea what the difference is between cash flow and earnings. That's not a judgemental criticism, just an observation. --Mike Buckley

To: Chuzzlewit who wrote (7331)	12/10/1999 6:51:00 PM
From: J F Allen	Read Replies (1) \| Respond to of 9068

Chuzz, I am a tremendous fan of your contributions to SI. However I have been following two of your thoughts from thread to thread and would like to offer a different perspective. First,your statement that people buy stocks for their future cash flow. I believe that people (Yuppies and Fund Managers) buy stock because for a variety reasons they believe the stock will appreciate in price in the future. Not only do the majority not have the knowledge to evaluate accounting much less the funds flow, but those who do chose to ignore it. You may identify this as a bubble or application of the greater fool theory, but it is the reality of the current market. I have accepted the reality and have been investing accordingly without emotion. There has been a major paradigm shift. How long it will last is anyone's guess, but the 401k/SEP money and demographics speak for a long run. All prices are established by supply and demand and it looks to me that demand will continue for a long time. Second is your feeling about employee stock options. Again I agree with you in theory, but I have taken my old portfolio from 5 years ago (PFE, IBM, MRK, GE etc.) and compared it to my current stocks (INTC, GMGI, QCOM, CSCO etc. and one of the identifiable variables is the participation of broad numbers of employees in stock options. It appears to me upon analysis that every company that I own that is doing exceptionally well is very generous with options at all levels and those who are lagging are not. Just food for thought.