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February 1, 1999

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Subject: I can't Bear it
Author: jkoisch

I sat in bed this morning listening to the Fox News version of the weekly business roundup. I'm convinced that Rimpinths was the older value guy on the right. I watch these shows very rarely, and CNBC even less. Clouds the objective judgement I think anybody needs to make money in this game.

Have you guys noticed that these experts (?) can speak out of both sides of their mouth at the same time? On the one hand, they go on and on about over evaluation of internet stocks. To their credit, they are at least allowing that there will be some real leaders in the field and that the word internet does not necessarily equal over-valued. That might be news to some of you. One guy, though, had the temerity to decry the internets because no institutional money was following the stocks. First, that's a lie. An untruth. Outright wrong information. Second, his preconceptions about the safety and wisdom of institutional money need to be taken to task. If their money is so much "better" than ours, why can I destroy 90% of funds year over year.

"Have you guys noticed that these experts (?) can speak out of both sides of their mouth at the same time?"

Out of the other side of their mouths, though, they're talking about the market's efficiency over time. Am I mistaken or have the internets been around for 3-6 years, depending on who we're talking bout? This is not a new phenomenon.

Let me go on record as saying

- The internet is a new paradigm, with far-reaching consequences to both the cost and revenue side of doing business

- Where automobiles, computers, and aerospace all emerged as exciting industries this century, they all had extensive government influence, in the form of tax breaks for following certain directions, developing infrastructure, or as a customer. Am I suggesting that the internet is free of Govt-influence? Not at all. In fact, the original back-bone of the internet was constructed by the govt. However, no other industry that I can think of has had such low barriers to entry and low barriers to viability, not to mention such a hands-off approach to government intervention, as the internet (understandably thanks to campaign contributions from silicon valley). Regarding company valuations, this may be seen in the fact that some fledgling internet companies are looking to the market to act like venture capital. It is the bid for ownership that drives the price of shares up. Are there day traders and others benefiting from this? Sure, just like there are "leaches" in any other stock momentum run-up. Their money is just as good as LTB&H money (see next post). Ownership of the next viable technological leap forward will have its rewards (NTAP, CSCO, QWST).

- In my opinion, it is the biggest free-market this country has ever seen. We are seeing cause and effect, what happens to a market without hands-on manipulation by Keynsian-minded money theorists (Philip's curve guys). Read between the lines of Greenspan's speech, and what he was saying is that he has no interest in getting involved in the internet craze.

"I think the best metaphor with which to view the internet is as a developing nation, whose chosen currency is the dollar."

- I think the best metaphor with which to view the internet is as a developing nation, whose chosen currency is the dollar. Increasing population, increasing "GDP", increasing viability wrt other "nations." As long as the market remains free, or relatively so, this can become a trans-global first world nation whose effects we can't even begin to figure.

It makes me angry to hear these institutional folks talk about this internet stuff like it was a disease on their blessed market, that this "craze" will be short lived, that these stocks are the most vulnerable to corrections, which could happen at any moment (even on the weekend). They had the audacity to compare the internet stocks to the auto makers in the first 20 years of this century. Well, the internet IS a newish industry, which will change the way Americans live. They got that part right.

But it is always so with bearers of the truth, with revolutionaries. They're crucified and railed against because their message always has the status quo as the target. That's why fools are the only ones who are allowed to speak the truth - they're too stupid to know better .

John


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