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To: Ramsey Su who wrote (13489)	8/8/1998 3:57:00 PM
From: Jon Koplik	Respond to of 152472

To all - the following is something of possible interest to those of us still scratching our (collective) heads over stocks like YHOO and AMZN. This was "lifted" from the current Barrons. To the Editor The July 13 Plugged In column by Eric J. Savitz uses the tulip bulb analogy in discussing the soaring price of Internet stocks, noting the tenuous connection between prices and fundamentals. When phenomena such as this come along, it's time to use the new analytic tools of thought -- contagion theory. After investing in a stock, individuals become motivated to spread the idea to others, knowing that imitators will drive up the stock's value and might help enrich their friends. So we give out stock tips favoring whatever companies we decide to own. Each trade on the Nasdaq, NYSE, etc., also publicizes investment decisions. Internet enthusiasts are more likely to know about, use, understand and invest in Internet companies than other people would be. So the investors in these companies include more enthusiasts than do the investors in other kinds of companies. They give and get more of their stock tips in the globalized fast medium and excel at electronically spreading their thoughts worldwide. Armed with this enriched concentration of electronic communicators, the shareholders of 'Net outfits routinely outdo the shareholders of other young companies in the arena of belief transmission. The bull market in Internet stocks results from ideas spreading in large host populations of individual investors, who come to outnumber the institutional investors. Proliferating beliefs even create enough demand to price institutions out of the market. This leaves the stocks of Internet companies widely held by individuals, rather than institutions. That is the new and different element to the wild runup in the stocks of Internet companies. The downside: Thought contagions of shorting, selling, and panic can also spread lightning-fast, and may crash an Internet stock with remarkable speed. AARON LYNCH Evanston, Illinois The writer is author of Thought Contagion: How Belief Spreads Through Society. -- EDITOR