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Technology Stocks : Citrix Systems (CTXS) -- Ignore unavailable to you. Want to Upgrade?

To: J F Allen who wrote (7395)	12/10/1999 7:54:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 9068

JF, thanks for the accolade. First,your statement that people buy stocks for their future cash flow. I never meant to say that. What I did say is that the only rational way to evaluate a company is based on its cash flow. The reason I am convinced that we are experiencing a tech stock bubble is precisely because so many people have abandoned any semblance of rational valuation. We saw a similar bubble in Japan during the early 80's when stocks were bid up to astronomical levels, and I believe we are seeing this now. Unfortunately, most bubbles are identified after the fact. Almost everyone recognizes that the "nifty fifty" was a bubble, but how many recognized it at the 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. I think that you are confusing cause and effect. Your current portfolio is oriented towards companies experiencing hypergrowth, while your previous portfolio was much more staid. But I believe that your portfolio's performance has nothing to do with stock options. I believe that many investors are blissfully unaware of the financial impact of options, and because they are not treated as costs on the income statement, they tend to be ignored by the financial press and analysts as well. That leads to inflated earnings. I do believe that there is a paradigm shift, and that shift is that the economy can sustain much greater non-inflationary growth than previously believed because of the increased productivity resulting from technology. But I don't for a minute believe that such a shift extends to changes in valuation. Happy holidays to you and yours, CTC