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Technology Stocks : Riverstone Networks (RSTN) -- Ignore unavailable to you. Want to Upgrade?

To: sharesighted who wrote (18)	2/22/2001 10:45:00 AM
From: Nick Zaharias	Read Replies (1) \| Respond to of 290

sharesighted - I'm glad you're an amateur and not an investment pro because your logic and your assumptions are very seriously flawed. I'm not sure you understand how to build valuation models. Nick

To: sharesighted who wrote (18)	2/22/2001 4:25:04 PM
From: Adam Nash	Respond to of 290

You shouldn't "ignore" the vast majority of shares in Riverstone just because they are "locked up" and "don't affect the market". The price of the last trade marks the valuation of the equity in the whole firm, and is based on the total number of outstanding shares, not just the float. Comparing valuations like Price/Sales and Price/Earnings are not the end-all be-all of analysis, but they are useful tools to gauge what assumptions are built into a given price. I personally found the basic metric comparison to Extreme interesting and useful in driving further analysis. If you believe long-term that market prices will track fundamental performance of the underlying business (ie, free cash flow) then understanding these type of metrics is essential. If you really believe in the strong version of the random walk theory, then you shouldn't be buying or selling any individual security, really. You should be indexing asset-classes based on the predicted correlations of performance based on different macro-level risks. The empirical history of IPO pricings shows that they tend to be done when the market conditions are most favorable for the company. But that is just in general, it doesn't get you very far with any individual stock, RSTN especially given when it went out. I am personally hopeful that the price will hold above IPO, unless the company really fails to deliver. BTW Let's try to keep this board civil - we've barely made it to 20 posts. :) Long RSTN