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

To: Bill Wexler who wrote (6839)	2/23/2000 4:32:00 AM
From: Bill Wexler	Read Replies (2) \| Respond to of 10293

A look at Inktomi makes me ponder my strategy: 1) What I did wrong I assumed the market would run into a lot of turbulence early in the year. So I unloaded a lot of tech a bit too early (leaving quite a lot of dough on the table). I invested in some "value" stocks. The market did tank, taking the value names down further and leaving tech (relatively) unscathed. WM was incredibly cheap when I started buying it at 25....look at it now. 2) What's going on? Something much more "macro" that I may have missed at first, but I think I'm catching on...and the behavior of Inktomi gave me a big clue. I was afraid that perhaps all the "bubble" talk had a lot of merit and the Fed had declared all-out war on stock speculation. My mistake was assuming that investors would flee the high multiple tech names and buy low P/E, dividend-paying, boring stocks. A lot of tech did take serious hits, but the boring stocks continue to get more boring - in a bear market that may take a very, very long time to resolve. 3) What is it about Inktomi? The stock refuses to go down in the face of rising interest rates, worries about a bubble collapse, etc. etc. I know quite a few other stocks have been doing well - but Inktomi grabbed my attention and after studying its business, it occured to me that it is near perfect example of why investors are willing to pay higher premiums for "new economy" companies, even in the face of macroeconomic headwinds. Quite simply, Inktomi's business model is gorgeous. They offer an indispensable and compelling product, they can scale and scale and scale (more web traffic creates exponentially rising demand), and they are crushing the competition. Throw in the fact that increased investment in net hardware infrastructure and wireless web actually decreases their overhead while generating even more demand! This thing is amazing - even more exciting than the "early years" Microsoft. In fact, I wouldn't be surprised if companies like INKT and AKAM grew to Microsoft-like proportions some time down the road. So my conclusion is that the real "value" lies here...in a company like Inktomi, where it is useless to put a multiple on a dollar of current earnings because the growth is so intense it would be an exercise in futility. Furthermore, the dollar of reinvested earnings in an enterprise such as this has hundreds if not thousands of times more throw weight than the dollar generated by Sears or General Motors. I'm not throwing every penny I have into this company. But I'm making a sizeable investment. And I may kick out more of the boring and shift it into INKT (and similar plays such as AKAM). Bubble or no bubble, this is a company that in my opinion, must be owned...and will probably make a lot of long term investors very, very wealthy.