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To: edamo who wrote (148730)	12/8/1999 3:08:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

Ed, re: Bubble redux Try some financial modeling to convince yourself that this is a bubble and makes zero financial sense. Here's what I did: Assume a hypothetical growth stock currently generates $1 in free cash flow. Assume that FCF grows by 45% per annum for the next ten years, followed by 10 years of 25% growth, followed by 10 years of 15% growth, after which it is a mature company trading at 15 times free cash flow. Now apply a risk-free rate of 6.5% plus a risk premium of 20% to those very optimistic numbers. Result: a PV of $66.74. Rephrased, this means that such a company should be trading at a multiple of cash flow of no more than 66.7x ttm cash flow. Now look at YHOO. It trades at a ttm multiple of CF of 584! Now you tell me what this means. I think it means that YHOO is set up for a 80% - 90% permanent haircut. So is there a change in the basic philosophy of investing? Not on your life. This melody been played countless times before. Remember tulips and South Sea. Remember Jiffy Lube and Boston Chicken. Remember the nifty fifty. We are simply replaying the same old siren song with a nineties beat. TTFN, CTC