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Technology Stocks : Siebel Systems (SEBL) - strong buy? -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (6656)	4/12/2003 5:59:46 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 6974

No answer needed. Hopefully my weekend jocularity doesn't offend. In reality the bulk of my recent technology investment activity these days is in seed-stage startup companies. If that's not buying clouds in the air, I don't know what is ! But that is with an eye to a reasonably risk-weighted expected increase in shareholder value. And as much as it might seem otherwise, I have no qualms whatsoever profiting from the madness of crowds... just as long as it's not on the generous end of such transactions. Mindmeld on the Cisco thread has an excellent future cash flow model, which is interesting and who knows, it could come to pass. Yes, I know. He and I developed it together over the last few years. Some pretty intense debate over that one, 'cause Cisco is almost as bad as Siebel in terms of dilution, only Cisco paid half to employees and the other half to the insiders of the companies it acquired - and this "equity purchased growth" really muddies the waters even more than the equity purchased labor! You wrote: I don't really bother with that kind of thing though, because mass adoption of technology is almost impossible to predict imo. From your posts I gather you are more of a momentum driven investor anyway. And fundamental analysis is irrelevant to momentum. So quite reasonable to avoid a lot of yucky mathematics which doomed to be dashed on the rocks of mass hysteria anyways. Me I use these models for LT positions. Not because I think I can predict the next N years, but kind of as a reality-check against assumptions. When we value shares of a company and say "these things are worth holding", we are making assumptions about what they will be worth in the future - whether or not we admit it. If we buy something based on assumptions that are not defensible, then we shouldn't be surprised with the outcome. Whether or not we know what these assumptions are! So I use these models as a framework to surface and validate assumptions. It's impossible to build a reasonable DCF model without articulating a few assumptions. And if I can find a bunch of assumptions that lead me to a stock price of X and the issue is trading close enough to X within reason... then I've got a "fair" price. But if I can't create a DCF model to deliver price X that doesn't have the company getting larger than the DoD, then I might think twice about X being reasonable. For example. I still might be wrong. But investing is a risk-weighted business, so there's no sense taking on really high odds just to break even! John