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Technology Stocks : Altaba Inc. (formerly Yahoo) -- Ignore unavailable to you. Want to Upgrade?

To: Tim Bagwell who wrote (11462)	6/28/1998 4:38:00 AM
From: Bill Wexler	Read Replies (1) \| Respond to of 27307

<<But the problem with your argument is that if it's wrong to short YHOO then it must be right to go long.>> No, that's not what I implied at all. Going long would entail high risk at these levels, but going short would entail completely unacceptable risks. Let's look at this from several angles: 1) Supply and demand - There are a lot of people out there who want internet stocks and there simply isn't enough supply of good brands - and the good brands that are out there have small floats with no large sellers in sight. A fund manager who wants to buy a small chunk AMZN would probably have difficulty finding shares (I believe James Cramer did a recent column explaining this phenomenon - it should be required reading by any short-seller), but I don't think he is going to be scared away if the bid jumps 4 or 5 points as the MMs try to entice someone - anyone to sell some stock. At these price levels those 4 or 5 points represent a relatively small percentage move - but the jumps scare a lot of the amateur short-sellers into covering rapidly...further exacerbating the price rise. I have never seen short-squeezes as extreme and persistent as those in Yahoo and Amazon. 2) Bad news - Never, never, never, never short a stock unless the bad news is compelling or unless the hype does not jibe with reality. Yahoo's recent announcement of an upcoming loss for the quarter and year due to writeoff doesn't count as bad news. Perhaps it will when these businesses become more mature - but not yet. I have begun to notice something interesting about Yahoo's management. They are following the Microsoft model of underplaying their foward-looking statements - yet delivering superior performance. 3) Valuation - Is Yahoo expensive? Yes it is...it is extremely expensive. Great growth stories always are - except if the economy is in recession or we have a prolonged market break. Overvaluation is a good reason to short if, and only if, the stock has other negatives. You may get lucky here and you may get some big sellers taking intermediate profits - however, you will be competing with the rest of the huge short interest to take advantage of this small - and short-lived - exit door. This is exactly why the few times that Yahoo had a sharp pullback it was very brief and the rise back up was so rapid. 4) Economics - A lot of people are comparing Yahoo to Iomega. This is a mistake. Yahoo is becoming a lynchpin of a new, and rapidly growing segment of the economy, Iomega grew rapidly into a nice slice of an economic pie until the pie itself (i.e. the disk drive and peripheral business) began to shrink dramatically. If you short a good internet company, then you are fighting a tidal wave. Certainly there will come a time when this portion of the economy stabilizes and we enter into a more traditional business cycle. At that point, it'll make more sense to target the internet Iomegas (whatever they may be). 5) Visibility - absolutely everyone knows about the internet. I'm amazed by how fast people all over the world are adopting this medium and the rate of growth of business transactions. You have people buying Yahoo stock simply because they use it all the time and they think its neat - and they probably don't bother to check the current P/E ratio. 6) Time - most shorts, unless you are shorting a complete fraud, are short to intermediate term investments (in the case of a complete fraud, the short-seller hopes never to cover thereby avoiding paying any capital gains taxes). In Yahoo's case, time is definitely not on your side. The story and the underlying economics just keep getting better - and at dizzying speed. I am kicking myself for not going long this stock last year. It was one of those situations where the glaringly obvious was right in front of my nose but for some odd reason, I did the stooopid thing and missed the opportunity. If there is an extreme pullback, i will be backing up the truck. Good luck, BW

To: Tim Bagwell who wrote (11462)	6/28/1998 8:22:00 PM
From: ratan lal	Respond to of 27307

Tim if it's wrong to short YHOO then it must be right to go long. There is a 3rd option. DO NOTHING. there are over 20K stocks why futz around with YHOO now. Wait for it to mature. I've lost money by not being patient enough Easier said than done. Difficult to be patient when you see your shorted stock go up and up and up with no end in sight. And there are those nasty MARGIN CALLS or even potential of margin calls that will try your patience. Their high valuation of YHOO is completely due to rank speculation which will fail someday. ABSOLUTELY TRUE. BUT WHEN ?? and how far will the stock go up before it crashes and burns. Thats the 64 trillion dollar question. Finally, been there done that and still not so much more wiser for the amount of money (in hard dollars) paid. One day...... ratan