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Technology Stocks : InfoSpace (INSP): Where GNET went! -- Ignore unavailable to you. Want to Upgrade?

To: EyeDrMike who wrote (1125)	1/28/1999 1:06:00 PM
From: Nanchate	Read Replies (2) \| Respond to of 28311

Text of Greenspan's Remarks on Internet Stocks Reuters WASHINGTON (Jan. 28) - Federal Reserve Chairman Alan Greenspan, in answer to a senator's question Thursday about the rush to invest in Internet stocks, quipped, ''Is that called investment?'' Following is the full text of the rest of his comments to the Senate Budget Committee on the subject: SOMETHING FUNDAMENTAL ''First of all, you wouldn't get hype working if there weren't something fundamentally potentially sound under it. The issue really gets to the increasing evidence that a significant part of the distribution of goods and services in this country is going to move from conventional channels into some form of Internet system -- whether it's retail goods or services or a variety of other things.'' ''The size of that potential market is so huge that you have these pie-in-the-sky type of potentials for a lot of different vehicles. And, undoubtedly, some of these small companies which have stock prices going through the roof will succeed and they very well may justify even higher prices. The vast majority are almost sure to fail. That's the way the markets work in this regard.'' SOMETHING ELSE GOING ON ''But there is something else going on here, though, which is a fascinating thing to watch and it's -- for want of a better term -- a lottery principle. What lottery managers have known for centuries is that you could get somebody to pay for a one in a million shot more than you can value of that chance. In other words, people pay more for a claim on a very big payoff. And that's where the lotteries profits ... come from.'' ''And what that means is that when you are dealing with stocks -- the possibilities of which are, either it's going to be valued at zero or some huge number -- you get a premium in that stock price which is exactly the same sort of price evaluation process that goes on in the lottery.'' LOTTERY PREMIUM ''The more volatile the potential outlook -- and indeed in most of these types of issues that's precisely what's happening -- you will get a lottery premium in the stocks.'' ''But to answer that question, is there some hype in this? Of course, there's some hype. There is hype in lots of things. But there is at root here something far more fundamental and indeed, it does reflect something good about the way our securities markets work: mainly that they do endeavor to ferret out the better opportunities and put capital into various different types of endeavors prior to earnings actually materializing.'' ''That's good for our system. And that's in fact -- with all of this hype and craziness -- that is something that at the end of the day probably is more plus than minus.'' REUTERS Reut10:56 01-28-99