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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: Steve Robinett who wrote (3082)	1/22/1999 8:26:00 AM
From: RocketMan	Read Replies (3) \| Respond to of 41369

Okay. Then you can sleep nights if the stock tanks. Long-term, I'm generally positive on AOL as a company. If AOL tanked while the tech market was strong, I would not be sleeping well. I would be wondering what is going on with AOL. If the entire market tanked as it did yesterday, I would not be down on AOL. It has done that before and will again in the future. I don't need the money tomorrow, so I will just tune out the day-to-day predictions of gloom and wait for the recovery. There was a bear on CNBC yesterday claiming fair value for the Dow is 50% of current value, which would be around 4500. A bear low would be much lower than this, so I suppose he would predict a 3000 or so low. I don't know how anyone can think that, given the current US economic strength, and with the Fed ready to lower rates if needed, and with the ability to pump money into the economy, that would really happen. However, if they do, they should be shorting everything they can get their hands on. Somehow I don't think they have that much courage in their predictions. I am bullish on the market in the long term, so I am ready to ride out temporary swoons. Now, this is different than AOL. AOL follows market conditions. But would AOL tank while the market was otherwise healthy and growing? I doubt it. AOL is around 75% owned by institutions. To tank, the majority of these institutions would have to decide that their analysts had made a mistake, and sell significant blocks of AOL. This ignores the fact that the index funds are not even able to do that, because they must mirror the indes. Furthermore, investors must lose faith in the future of the internet, which happens to be growing at 100% per year. They must lose faith in the future of e-commerce, in the future of convergence of data-centric entertainment/information media, or else they must find a better company than AOL to invest in. Can this happen? Sure, anything is possible. That is why investing is not a sure thing, and this is not a T-bond. BTW, if you have noticed, T-bond beta have been quite high lately, so maybe a mattress is the answer. If you want to make your case, as you have done in older posts, it must be made on the basis of valuation. Unfortunately, you can use valuations that make AOL worth anything from $10 to $500, so you can justify any valuation or any position you want to take. But if you really think the stock is so overvalued, I hope you are either short, playing options, or out of it altogether. Let's see where we are at the end of the year.