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To: Mark Fowler who wrote (49525)	4/8/1999 10:55:00 AM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

No much longer than a day trade, get some Egrp if you can I added to it at 87 today!! At 97??

To: Mark Fowler who wrote (49525)	4/8/1999 9:23:00 PM
From: Glenn D. Rudolph	Respond to of 164684

The Epicenter – 8 April 1999 5 It is important to keep in mind that a major driver of the internet stocks is an imbalance of supply and demand. The price of any good or service is determined not by its inherent “worth” but by the law of supply and demand—and good internet investments are in short supply and great demand. As described, we believe that there are compelling reasons for investors to invest in the internet (demand), and, unfortunately, a relative paucity of great opportunities through which to do so (supply). If you want to live in Manhattan—an experience that many reasonable people would consider less than worthless—you have to pay mind-boggling Manhattan prices. If you want to invest in the stocks of companies that appear to be on their way to becoming the leading growth companies of the early 21st Century, you unfortunately have to pay mind-boggling internet prices (at least for now). The details are important, but we would not talk ourselves out of buying a leader because of a small amount of hair on the story. The best stock-picking tool in this sector right now is a shotgun, not a rifle (it's all about the “story.”) The best companies, moreover, have been able to evolve along with the industry, avoiding destruction and pursuing new opportunities (which makes it frustrating to say “well, until they fix that problem, they won't have me as a shareholder”—because by the time they fix it, the people they do have as shareholders may be 2X as rich). As one investor we respect says, “when the microscopes come out, the returns become microscopic.” We would not waste a lot of time looking for “cheap” names – no internet stocks are cheap, and you get what you pay for. We do not believe that the internet bubble as a whole is tulipmania, but there are plenty of tulip bulbs masquerading as companies out there. If the sector corrects, we believe the stocks of the weakest companies will drop 70% or more, and we don't think they will necessarily come back. When the biotech stocks finally blew up, the stock of one of the strongest companies in the industry, Amgen, dropped 50% in a month—but it is now trading at more than 3X its high prior to the correction. A lot of the lesser names just disappeared. We would not short these stocks simply because they are expensive—too often in the industry's short history, this has been fatal. Just because a stock should regress to a historical mean doesn't mean it will—especially when every investor in the world is trying to accumulate it. Although the internet stocks are desperately tempting to short on valuation, we would carefully analyze the risk/reward ratio before doing so. The most you can make when you short a stock is 100%. As has been made clear over the last two years, the most you can lose when you short these stocks is, well, 1,000%-plus percent—which is not exactly a compelling risk/reward proposition. Based on the sector's propensity for boom-and-bust price spikes, we would actively manage risk exposure. At least three times over the last year, the internet stocks have spiked wildly in a frenzy of panic-buying and short-covering and seemed as though they would never come back down. Each time, though, when the euphoria wore off, they pulled back 30% to 50% from their spike highs. In the event that we get another one of these spikes, we wouldn't panic—we would trim positions into the run and buy in again once the bloom falls off the rose. The stocks are very sensitive to catalysts (such as the gushing press about the growth of e-commerce over the holiday season), so before adding to positions, we would also think about what might be coming next. What we look for in internet investments. In trying to pick the sector's best long-term performers, we tend to look for the following: 1) businesses that are possible only because of the internet and could not exist without it—such as AOL, Yahoo!, eBay, Doubleclick, and to a lesser extent, Amazon.com; we do not believe that major internet market value will be created by porting existing media and retailing concepts online; 2) enormous market opportunities—if the concept works, we want the company to be able to get huge; 3) platforms or foundations that can Remember the laws of supply and demand. Rely on a shotgun. You get what you pay for. Keep your head if others lose theirs. Key characteristics.