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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end? -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (2635)	2/6/2000 5:36:00 PM
From: Mad2	Respond to of 3543

Dale, in a environment of momentum investing, where one buys a stock based on technical factors of supply and demand for the stock, valuation means little, however at some point the supply and demand for the issue will gravitate towards the intrinsic value determined by its discounted future cash flows. Tweeking a DCF model can lead to wild differences in the future value of cash flows, but that's what it fundamentally comes down to. Buying a equity today that is undervalued according to the value of it's future cash flow or has the potential to improve its future cash flow from the base assumption. The value or price being determined against other alternative investments (eg maney market rates, T-bills, etc..). What is dynamic is the risk premium or discount that investors assign to varrious investments (real estate, cash, bonds, equities and the like). Mad2 I should point out that doing a DCF on most internet issues is like writing a science fiction novel, given the lack of a track record. Unfortunatly, many ignore the financial analysis, relying instead upon the price appreciation of these issues in the past few years believing or hoping it will continue.