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Non-Tech : Bill Wexler's Dog Pound -- Ignore unavailable to you. Want to Upgrade?

To: Phil(bullrider) who wrote (6115)	1/15/2000 9:38:00 PM
From: Graeme Smith	Read Replies (1) \| Respond to of 10293

>> Most people that are currently investing in stocks based on the Internet believe that in the future >> the companies will grow into the PE. That was possibility no 2. However the Nasdaq PE of 200 is for all stocks, not just the internets. They might need to grow a thousand-fold to bring the Nasdaqs PE down 10-fold. The potential of the internet stocks is that America is so far ahead of the rest of the world and will reap a large part of the profits. They have two weaknesses that I see. Firstly that there is no such thing as easy money or easy growth. The faster the internet grows, and the more money companies make off it, the more companies jump onto the bandwagon. Eventually all but a few companies get nothing but a tiny slice of those easy profits. The second weakness is that investors are rewarding internet companies for growing revenue not profits. Those companies react the obvious way. They start giving away $1 bills for 90c. Doing this is not necessarily bad. If your the only company in your industry doing it, or the significant first mover advantage such as Amazon it can give you market share. Unfortunately when every company in the market starts giving away $1 bill for 90c, which they must do to survive, nobody wins market share, and nobody makes any money. >> All of my Internet based longs are the so called "support" companies. I think that is wise. They are the companies with the most long term opportunity. >> Don't almost all start-up companies lose money when they are in their infancy? >> Aren't almost all Internet companies still in their infancy? Yes. And like start-up a few will grow to be worth millions or even billions of dollars in the next 10 years, and most will go bankrupt. The problem is that at the moment they are all have market caps of billions. >> I will not argue the fact that investors are appearing to overvalue a lot of start >> up technology companies. The only point I would offer as an argument is that we have >> nothing to base an argument on because we have no history yet. Radio, automobiles, biotech, ...