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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Joseph Beltran who wrote (5069)	7/6/1998 1:38:00 PM
From: Joe Dancy	Respond to of 9980

David Dreman recently discussed these stocks Joe. The meat of what he had to say is set out below. Maybe Asia will knock some sense into these players, as well as large cap stocks, so they will more accurately reflect the underlying business value. Also, interesting article today that while net companies are spending millions to build market share the "revenues" they claim from web advertising is overstated by a factor of three - mercurycenter.com ***************** "This reaction to surprises is rooted in psychology according to Dreman, with investors tending to overreact to good or bad news. This overreaction is especially evident in the technology sector and in small capitalization stocks. Dreman currently considers technology stocks like America Online and Yahoo to be overpriced based on overly optimistic forecasts (that are also likely to be wrong) - "forecasts often have to go out a decade or more to justify the high prices many companies are trading at." Dreman believes AOL's current valuation will require a 50% earnings growth for the next 18 years. To deliver those kinds of profits, Dreman estimated that AOLÿ will need to increase its customer base during the next 18 years from about 12 million subscribers today to about 18 billion, or more than three times the current global population. As for Yahoo, Dreman crunched the company's numbers on the assumption that its earnings would grow at an incredibly furious rate during the next 25 years. Even in that rosy scenario, Dreman assigned a $4 valueÿ to Yahoo's stock. The Internet directory's stock was trading at $115 yesterday."