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To: Bill Harmond who wrote (87116)	12/11/1999 3:46:00 PM
From: KeepItSimple	Read Replies (2) \| Respond to of 164684

>Yahoo's in the S&P, has operating margins (yes, KIS operating margins, >not interest income) near Microsoft's percentages, Yet the fact remains that in last quarters statement, almost 75% of the total income was from investment INTEREST. It has high operating margins, but it has never shown that it can increase the AMOUNT of sales to microsoft levels. DeBeers has an operating margin of around 2000%, but that doesnt automatically mean they can start selling 5 billion diamonds a year. Most of Yahoo's ad space still goes unsold. And there isn't a single public internet company in existence that has revealed to the SEC how much of their "revenue" is actually banner-barter. Not that I personally will be surprised when the truth finally comes out..

To: Bill Harmond who wrote (87116)	12/11/1999 4:15:00 PM
From: GST	Read Replies (1) \| Respond to of 164684

William: Supply and demand. The risk is clear, the relationship between supply and demand can change. This is not the same as saying it will reverse. But can it reverse? 100% definitely yes -- it can reverse.

To: Bill Harmond who wrote (87116)	12/11/1999 6:08:00 PM
From: Eric Wells	Read Replies (1) \| Respond to of 164684

Eric thinks it's irrational. It's not his money. William - I don't think I've ever characterized the risks you take as irrational - in truth, I don't know what risks you do take, so I can't really comment on whether I believe such risks are rational or not. What I have written at length about, however, is the market capitalization and profit-making potential of many of the internet and b2b companies - some of these companies, I believe you own stock in. And the essence of what I have written is this: there is a tremendous risk that many of these companies (even the "blue-chip" ones, including Yahoo and Amazon) will never make enough profit to justify their current market caps by traditional fundamental methods of valuation. You may disagree with this (I assume you do), and I would guess that you probably disagree because you (1) believe in the profit making potential of these companies, or (2) because you don't believe in traditional fundamental methods of valuation. Or, your disagreement could be due to some combination of these two reasons. I would be interested in knowing what methods, if any, you use to determine an "appropriate" value for a security - if you are ever able to look at a security and say "it is over-valued" or "it is cheap" and what factors you evaluate in order to make such determinations. I would also ask you if you feel it is important that a company's stock price has any relationship to the profit making potential of the company? If so, how would you characterize or define that relationship? Thanks, -Eric