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To: Eric Wells who wrote (88283)	12/21/1999 10:10:00 PM
From: KeepItSimple	Read Replies (6) \| Respond to of 164684

Eric, I consider you a friend, and I am worried that you're going down the path I went down 7 or 8 months ago. I was even more negative than you, because I literally hung out in the offices of several local public internet companies with friends of mine who worked there. I saw first hand what total frauds the companies were- I saw complete lack of work ethic, I saw constant checking of company stock quotes, I went to parties and heard an endless series of execs ridiculing the stupid investors who would pay even a dime for shares of the companies they just brought public. I thought to myself- this is such a blatant fraud that it has to collapse any day now. And at one point I lost close to 4 million dollars shorting these dogs. And then one day, the most important and significant thought I've had in my entire life hit me like a ton of bricks. And that is: "The average investor is so incredibly stupid that I cannot comprehend them. I cannot ascribe any motive other than lottery fever to their actions. I cannot fight millions of people who will buy eBay at any price." And I started buying out of the money calls, across the board, on every hair brained internet stock I could find. If the company showed an ability to skillfully cook the books, or pump up the revenue figures with phony banner-swaps, then I bought twice as many calls. Sometimes I weep for humanity, but I've made so much money since late october that I honestly have no idea what to do with it. Eventually, when this finally ends, capitalism as we know it in this country will end. The social upheaval when every single window and orphan is buying YHOO at $40,000 per share because it goes up every day, and suddenly one day collapses, will be incredible. People with the job description of "broker" or "analyst" will be hunted down by people who have lost everything, and laws will be enacted to keep bucket shops like Kleiner Perkins from ever doing this again. I have no doubt whatsoever that the economic destruction that will occur will be so severe that the government will retroactively cancel all trading activity in half the nasdaq (the british did exactly that after the south sea bubble burst and bankrupted half the population), and bail out all the individual investors who lost their life savings. Think savings and loan, but on a unimaginably large scale. But until that occurs, the ONLY way to keep your shirt is to turn off your brain, stop thinking about logic, and start making money hand over fist. Just try it once- ok? Buy a 20 point out of the money call on Yahoo and see if you dont double your money in 2 days. Then try buying 10 calls. Then 100. But never, NEVER, NEVER short any internet stock in this climate. It doesnt matter that you are right- the entire population of this country is putting their money into a pile and betting that THEY are right.

To: Eric Wells who wrote (88283)	12/22/1999 12:25:00 AM
From: dbblg	Respond to of 164684

>>How do you justify Yahoo's current $105 billion market cap? I'm too tired for all the handwaving which justifying YHOO's market cap (or MSFT's, or GE's, for that matter) would require. They are getting a premium for some good reasons (superb management which has underpromised and overdelivered, model which has delivered, and should continue to deliver monster return on invested capital) and some not-so-good ones (they are a big cap, they are a "blue chip"). I have a feeling we have had this conversation before, but I think all determinations of valuation need to be made in the context of an individual's time horizon and investment goals. Mine have kept me out of YHOO for several months. >>But you can't deny the fact that there are many profitable growing companies that have had flat stock prices this year - mainly due to the fact that the companies have not found favor with momentum investors. I'm having trouble finding stocks like that. There are certainly plenty of good stocks which have underperformed flaky stocks. As someone who spent much of the past two years heavily overweight QCOM (up less than 2% last year, this year, well, you know...) I can only say that momentum, like chance, favors the prepared mind. (I should mention that I wasn't as well prepared as I thought I was; I sold QCOM about 150 points ago...) >>But when stock prices rise so far above where even the most optimistic fundamental analysis would place them, I can think of no other reason than momentum. No disagreement there. This might be a good time to pull up AG's excellent speech from a few months back on risk premiums. Much of the recent run-up in my favorite stocks, let alone the JWEBs of the world, can, imo, be attributed to excess optimism and a concomitant willingness to pay more for a nicely articulated strategy than investors in more fearful times would pay for results. I'm pretty heavily overweight in ITWO and INSP, which are trading more than triple their 200 dmas. At some point they will have to correct hard, move sideways for a few months, or both. Take care, Ganesh