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Technology Stocks : WCOM -- Ignore unavailable to you. Want to Upgrade?

To: jackrabbit who wrote (6288)	4/6/2000 12:51:00 AM
From: Jeff Hayden	Respond to of 11568

- OT - JR, I gotta address your simple example, "if you pay $100 for a stock with a 100 p/e, that stock will give you $1 in earnings in a year. If you use the same $100 to buy a government bond, you would get ~$6 in earnings (note this is an example and I am not advocating govt. bonds as an investment). Investors are not being compensated in earnings for the risk they are taking. Maybe not today or tomorrow, but eventually people will figure that out. 1. Very, very few stocks give dividends anymore - so you don't get that puny $1 (or $10 if the P/E is ten and the stock price is $100) for your pocket - it just sort of dissolves into thin air. Instead, you get all the increase in evaluation of the stock due to market pressures (if you sell at the right time) - likewise you can lose if the price drops. The market is nothing but a veiled way of gambling, but we knew that. Now I could take the $6 in bond interest, or I could gamble to increase the value of my holdings by investing in the S&P 500 which lately has returned nominally 26%/year. Which of the two makes me wealthier at the end of the year? Which will leave me wealthier at the end of 2000? I'm betting on the S&P 500 and a few stocks -WCOM, etc.