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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Jess Beltz who wrote (40949)	12/25/1998 11:26:00 AM
From: Skeeter Bug	Respond to of 132070

jess, re" the nets. invest in probabilities and not possibilities would be my advice. also, the unknown s/b discounted in a rational market not valued as it is in the nets. jmho. have a great holiday season and good luck in 1999 :-)

To: Jess Beltz who wrote (40949)	12/25/1998 1:38:00 PM
From: Kerry Phineas	Read Replies (2) \| Respond to of 132070

Jess, eventually all companies should be valued based on one of the popular parameters, whether earnings, book value, ROE, valuable strategic or technological assets, etc. Concepts like number of impressions, membership, etc should be recognized based on the precept that eventually they will translate into earnings. I think its logical that one shouldn't value companies in a completely and utterly different fashion from similar companies that do not have a web presence. The flip side deals with the reflexive nature of the market where companies with large market values can improve their fundamentals by offering equity to the public or having an intelligent acquisition strategy. When most public internet companies are at similarly high valuations I don't see how an acquisition strategy would be particularly intelligent. OTOH a couple of the internet companies will survive and their current valuation may be justified. Ergo, the statement," It is not at all clear that any of the stocks so mentioned, even the internet darlings like amazon.com truly are overpriced." may play out. For the internet companies the odds that most of the current highfliers will survive is minimal, though. Who the hell knows. What is more clear to me, though are that pinheads look at a short period of rapid growth, pull out their exponential adding calculators, and project into the future, if they even bother to do that. Your premise that we should do so with the internet companies but should take the opposite tact with the semiconductor equipment manufacturers is of course rather illogical. I'm far from an expert on semiconductor equipment manufacturers, but I always fall back on the premise that eventually there will be a smaller number of manufacturers in semis and semi equipment due to the nature of the biz: exponentially expanding economies of scale until the point where no further technological developments can be made, the huge and growing research and development and capital investments required to be competitive, etc. When some of the second and third tier companies with questionable balance sheets and an inability to survive based on their current earnings power have been taken up near their old highs during cyclically strong periods that is a sign to me they're ahead of themselves. One thing I don't like is statements like ,"No one can know whether companies like AMZN or NVLS are properly valued or not," and use that logic to send the companies' shares up higher. If you don't have certainty of what is going to happen in the future, one shouldn't attach a premium to the stock and value it based on the most optimistic scenario, imo. Of course momentum investing has taken hold of the market as a result of mutual fund managers'/institutional investors' need to compete with indices and each other(which Soros touches on in his recent book), which has created a scenario where fundamentals have been thrown out the window, so neither of our arguments are particularly relevant.

To: Jess Beltz who wrote (40949)	12/26/1998 12:05:00 AM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Jess, Good note. Let me get to your points one by one. 1. Somebody does have a model for valuing internet stocks. I am one of several who do. They are not metaphysical creations but real cos. with stock who have to try to earn money some day. Some will. Most never will, as the net is too price competitive. Of course, the fact that they are overpriced has not been demonstrated with certainty at a manic top. But it will be. Just as it has with every other mania in history. Nobody ever believes the tulips will crash until they do, but you can still build a model that gives you a ballpark figure of where tulips should be priced. 2. Yes, the start of a secular decline in profits at semiconductor cos. has been mistaken for a cyclical downturn by many who do not follow the chip cos. and chip equipment cos. by reading all the news. For example, many are calling this minor blip in book to bill to a level that is still a disaster, as a great turn instead of a seasonal blip caused by the greatest overbuild of pcs we have ever seen. This will become clear to all sometime in the first quarter. It should be clear to all after the Ingram, Inacom and MUEI reports, or even after the Dell report, but so far the bulls refuse to let reality interfere with their fantasy that the worst is over. We are about half way through the cyclical downturn and have barely started the secular downturn. The pc related area, which is pretty much everything in technology other than biotech or instruments, is going into another one of its many swoons since the 1950s due to the fact that the new stuff isn't very new or very interesting. 3. If you play trading sardines like tech stocks, please think about playing options and using a money management system like 90/10. See my article, "Tech Stock Speculating While Wearing a Belt and Suspenders," techstocks.com. Remember the old saying that all tech stocks eventually go to $4 a share. Not all of them do, of course. Many disappear completely and many go to a bottom a bit above $4. And a handful make it until the next upswing. The problem is, the majority of them going to $4 is a good way to place your bets. You can make huge money on the upside, but a good options program keeps you from losing it on the downside. Best Wishes, MB

To: Jess Beltz who wrote (40949)	12/26/1998 11:36:00 AM
From: Mike M2	Read Replies (1) \| Respond to of 132070

jess, one point about many of the internet stocks is there is little or no barrier to entry for some of them. In addition, while large traditional retailers are slow to respond not every business will roll over and play dead to the likes of Amazon-many will fight further pressuring margins for all players including the internet retailers. One obvious point that many i-net bulls seem to overlook is the net retailers will not create new sales but take from the traditional sales outlets so you can guesstimate the upper limits of the sales potential of the net retailers. IMO few i-net players will survive the bursting of the bubble and those that do will trade for pennies on the dollar off their peak prices -wherever that may be. IMO The parabolic run up in the internut stocks is the result of a once in a lifetime mania and a savage short squeeze. Mike