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To: Frodo Baxter who wrote (1310)	12/15/1998 9:03:00 PM
From: Yogi - Paul	Read Replies (1) \| Respond to of 2025

Lawrence, <<Be afraid. Be paranoid. Because in the end, valuations matter. Business is pain. APM will go bankrupt. And hubris kills.>> Thanks for ruining a perfectly lovely day. <g>. <<Competition will only become more perfect, margins will come under more pressure, and the only way to make a buck is productivity growth, transient competitive advantages that don't even last a damn product cycle.>> Sounds like the disk drive sector. Yogi

To: Frodo Baxter who wrote (1310)	12/15/1998 10:28:00 PM
From: Mark Oliver	Respond to of 2025

<Not that the speculative small stocks are any better. Mark likes Lernout and Hauspie? Led by Gaston Bastiaens? The same character who drove Quarterdeck to the ground because of an overly-aggressive expansion strategy? And running the same m.o. at LHSPF? Please.> You may be right that Bastiaens will destroy a good thing through overly agressive expansion, but L&H seems like the best pure play on Speech Recognition. Their connections, although never stable, to Microsoft make them interesting and the great, almost stagering, number of product licenses they have out suggest they will be a big player in the industry. I also like Dragon and Nuance, but they are not public. General Magic is interesting, but they've got some issues to resolve which could make them a great investment. Could be we are going to be speaking to everything soon. If they get the cheap DSP's going, we may take it for granted that a rooms lighting or temperature rises and falls at a your word. Driving your car, you could say, "Radio, play KFOG", or "Radio, play the market highlights", "a little softer please". Have you, or anyone looked into the development of Virtual Private Networks? Seems like there is some good work to be done here and it may not all go to the big boys. Any opinions on Checkpoint Software? Checkpoint has good growth, commanding lead in computer security and they've had great growth. The share price doesn't reflect their business and they seem to be getting renewed interest again. The problem has been threat of competition from Microsoft and Cisco. Also, they are an Israeli company which may hold them back. Regards, Mark

To: Frodo Baxter who wrote (1310)	12/16/1998 8:28:00 AM
From: LK2	Read Replies (1) \| Respond to of 2025

RE-->Because in the end, valuations matter. Business is pain.<< Unfortunately, or maybe fortunately for the people less gifted, stock market profits are only partially based on valuations. Luck and skill both play a role in the market. You can go broke being right (short an "overpriced" stock like DELL or one of the other new-era Nifty Fifty and you're on the way to the poorhouse). Valuation is in the eye of the beholder. Even when there is outright fraud in a company, unless you are right in your timing, if you get overextended, you can easily be wiped out, or at least forced out of a losing position that will someday become a winning position, without your participation. Whether CSCO, GE, DELL, etc. will be the fabulous winners in the future they have been in the past, is anybody's guess. But for those who were lucky/shrewd enough to bet on them in the past, the returns have been fantastic. Whether the big caps outperform or underperform over the next few years, the New Era Nifty Fifty are probably as good a bet as any sector/group/industry/whatever. If the Nifty Fifty do crack seriously, it would very probably be a part of the entire market cracking, and no matter what stocks you are holding, you will be suffering on your stock portfolio. Caution makes sense. But being paranoid? And talking about value? What value is there in a stock market at DJIA 9000? You kind of have to twist the value equations to justify being in the market at all. Ben Graham said that value equations work in hindsight, but once you get to the current market, value equations kind of lose their value. (I'm putting it very loosely, and he was talking about using simple ratios to determine how much of your money in stocks versus bonds). Even if economics and value are dismal, you shouldn't let it get you down. Regards, and best wishes, Larry the Cheerful

To: Frodo Baxter who wrote (1310)	12/17/1998 11:38:00 AM
From: Robert Douglas	Read Replies (2) \| Respond to of 2025

Lawrence, you wrote the following: "And y'all think the savior for the dismal economics of capitalism is the Internet? Which makes businesses more efficient? More frictionless? That lowers the barriers to entry? Not quite. Competition will only become more perfect, margins will come under more pressure, and the only way to make a buck is productivity growth, transient competitive advantages that don't even last a damn product cycle. Be afraid. Be paranoid. Because in the end, valuations matter. Business is pain." I couldn't agree more with this statement. It has been something that has been bothering me for quite some time now - this notion that new technologies such as the Internet will make competition quicker to adapt. I have always felt that since margins tended toward the mean over time, that it was a dangerous practice to buy stocks of high margin businesses – something Wall Street believes in with a passion. Now it seems that this process may be accelerating - that high margins may become as stable as some sub-atomic particle in an accelerator. What are the investment implications if true? How will we make a buck in this brave new world of lighting-quick competition? Should we buy the companies that are behind with the notion they will be quick to catch up? It may sound perverse, but just like betting on sports, Wall Street gives you a greater reward if you pick this year's loser that turns into next year's winner. I welcome all comments on this issue. -Robert