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Technology Stocks : Internet Guru Discussion -- Ignore unavailable to you. Want to Upgrade?

To: wlheatmoon who wrote (321)	2/21/1999 3:58:00 PM
From: B. A. Marlow	Read Replies (2) \| Respond to of 4337

Not suggesting you invest in EGRP or any other stock, MKC. The rationale for ETrade's valuation is simple: People are willing to pay at least the current price for it. And exploring relative valuations on this basis is one of the primary tenets of Steve Harmon's work. After all, how could Steve know whether Jerry Seinfeld will be EGRP's 3 millionth customer?!. Last October, after Greenspan had failed to come through with those 25 basis points, EGRP was selling for less than its cash in the bank. If you bought the stock for $10 ($5 post-split), you were getting the entire business (which some analysts had estimated would cost $400-500 million to duplicate) FREE! Would that have met the definition of "value"? Warren Buffet didn't think so. He bought AXP at $73 instead. Here's another metric. Last July, Softbank invested hundreds of millions in EGRP, acquiring about a 27 percent stake. If you worked out the math, Softbank paid about $25.50 ($12.25 post-split) per share. Was Softbank's a shrewd investment? Well, it was not until mid-December that investors' perception of EGRP's value clearly eclipsed what Softbank had paid, but guess what? They decided it was pretty shrewd, if not way cool. Apparently, they still think so. So, when we deal with the issue of "overpriced stocks," we confront a transcendental question. It's the issue of buying for "value" (one asks, "relative to what?") or buying to make money. For some reason--and notwithstanding its wealth--there isn't much evidence Merrill Lynch has a winning strategy. Thus, my expectation is that I would not make money by investing in MER. That's "expensive." On the other hand, somebody's* gonna be EGRP's 3 millionth customer pretty soon. Thus, EGRP is "cheap." The accompanying chart tells me that others share this view: techstocks.com BAM P.S. What I meant was that making money from online trading is elusive and will be difficult for the run-of-the-litter (now over 100 online brokers) and especially, for MER. EGRP has already proven it can make money, and it's now morphing into a new financial metaphor over which, it would seem, MER is losing plenty of sleep.