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

To: Pruguy who wrote (5500)	2/22/1999 11:30:00 PM
From: Steve Robinett	Read Replies (1) \| Respond to of 41369

Pruguy, Yes, if a company does well, demand for its shares goes up. I could say something smart about that being obvious but I won't. I take it your point is not that the stock of performing companies are in demand but that because AOL is part of an index, index funds will have to use a portion of new boomer money to buy AOL. Okay. That hasn't made all that much difference so far in daily volume but I suppose index funds do have to use new money to match indexes. A more important point--a point almost philosophical in its importance--is your comment that not one argument supporting the valuations of todays high priced issues would make any sence if they were written 10 years ago....We are in a new era now Are we? Manias occur in most markets from time to time. Real estate, equities, tulips. On the other hand, paradigms of valuation do change over time. (For example, in the American colonies, inflation was seen as something that was bad for real estate markets because people paid cash and inflation raised that cash price whereas nowadays real estate is considered a 30 year asset and inflation is priced in). You suggest that the rules have somehow changes--it's different this time--where I might suggest that Internet stocks are just the current fad. Someplace around here I actually have a book on investing written in the early 70s (way more than 10 years ago) that advises looking for people building castles in the sky around new technologies. The book suggests going along for the ride but being prudent, Pruguy, with the amount at risk. Best, --Steve