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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (126472)	10/19/2000 10:19:30 AM
From: TimF	Read Replies (1) \| Respond to of 1584213

That's because when a company matures, the limits to its revenue and profit growth are more defined and that means the limits to its stock price are more defined. When the stock carries a P/S or an exorbitant P/E, the limits are much less defined. This is probably an accurate assesment. IT does seem unreasonable to me though that if you have two companies - company A makeing a large profit but growing slowly and company B growing rapidly but losing money and will probably never make as much profit as company A, that company B can often have a higher market cap. Or to put it another way some investors seems to care more about the 1 in a million chance that the company could be the next mega-cap, then they do about solid profitability. This was particuarly true of the internet bubble stocks. That bubble might have poped (but not for all of them), but there are other hot areas with crazy valuations. I guess investors like to swing for the fences rather then play small ball. Tim