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To: stsimon who wrote (50244)	4/14/1999 1:38:00 PM
From: Greater Fool	Respond to of 164684

This is a major speculative bubble, pure and simple. Don't confuse it with investing. You're right, from any fundamental point of view, there's no way any of the net companies are worth their current market caps. You'd have to believe that Yahoo, for example, will see cash flows of about a five billion dollars a year in the near future and through to infinity to rationalize a $50B market cap. But all valuations are some part fundamental, some part fantasy. Most stocks in the equity markets today are somewhat overvalued from a purely fundamental point of view (hence recent comments that to justify a Dow at 10K, everything has to go perfectly with the economy). In my opinion, the net stocks are mostly fantasy, but that certainly won't stop them from going up. Simply put, people are putting money in faster than they are taking it out, so stock prices are going up. They keep the money in because it's been drummed into their heads that equity prices go up over the long term. The thing that will deflate the net stock prices is people taking money out in one of three ways: - New IPOs (IPOs in March diluted the existing stocks' prices by $1.8Bn More to come.) - Release of currently restricted or insider stock. - Investors pulling money out of the sector faster than new money comes in. Of course these three affect one another. Dropping prices will make people less inclined to put new money in (a vicious cycle), but IPOs can paradoxically increase overall prices by increasing interest in the sector. What I'm trying to figure out, and you all can help me with this, is figure out what the metrics are I should be watching. The IPO calendar? Form 144's? Percent of household wealth in the equity markets? Percent managed by individuals vs. funds? GF