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

To: Proud_Infidel who wrote (11547)	4/19/1999 5:43:00 PM
From: Stann Golden	Read Replies (1) \| Respond to of 41369

AOL - block trade 296,800 This is a good sign for longs - trade was @16:02 prob a fund picking some shares back up at a discount.

To: Proud_Infidel who wrote (11547)	4/19/1999 6:04:00 PM
From: Dennis J Baltz	Read Replies (2) \| Respond to of 41369

Brian Valuing internet stocks is a crapshoot at best. Everyone has a different method of valuation because there is nothing similar to internet companies to compare it with. I prefer to use a PE/Growth rate method. Anything around 1.0 to 1.5 is a signal to look closer. This takes into consideration the PE ratio plus the company's growth rate. To rate a company with a growth rate of 8% (GM) the same as a company with a growth rate of 300% (AOL) is just plain stupid. This is what the WSJ article did. How many years of 8% growth do you have to have before you reach 300%? People should never ignore the power of compounding. If you invested $100,000 at 8% for ten years you would have $215,892. If you invested $100,000 at 300% for ten years you would have $1,677,721,600,000. Simple comparison of PE ratios ignores this compounding fact. As I said, it's just plain stupid to ignore this. That is what the professors article in the WSJ did. I would much rather have $1.677 billion after 10 years than $215,892. Does this help answer your question? I still didn't give you an exact valuation but these are two important criteria that I use for a first look.