Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Adaptec (ADPT) -- Ignore unavailable to you. Want to Upgrade?

To: Jimbo Cobb who wrote (3691)	9/16/1998 1:22:00 PM
From: Mark Brophy	Read Replies (1) \| Respond to of 5944

Adaptec is a good example. The price has gone between 10 and 54 in the last year without any major change in the fundamentals. The disk drive industry is notoriously cyclical, but the market acts as if this is a big surprise that couldn't be anticipated. The stock went from grossly overvalued to grossly undervalued. The S&P 500 fund you mentioned is subject to the same mispricing based on gambling parlor dynamics. IBM and Intel were grossly undervalued 4 years ago and are now overvalued. Check out Stocks for the Long Run by Jeremy Siegel at your local Barnes and Noble. There's a chart on page 94 comparing the S&P 500 to small stocks since 1925. The cumulative total return on small stocks...did not overtake large stocks once between 1926 and 1959....But between 1975 and the end of 1983, small stocks exploded. During those years, small stocks averaged a 35.3% compounded annual return, more than double the 15.7% return on large stocks. Even among large groups, stocks can be mispriced for a long time. Does anybody really believe that Microsoft is worth more than GE despite having far smaller revenues, profits, and book value? Is Marc Andreessen really worth the $30m or more he has received selling stock in a company hasn't made a nickel in the entire history of the company in an futile effort to compete against the best managed software company? Are the chief Yahoos really worth a billion dollars each? Is Amazon really worth more than Borders and Barnes & Noble?