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Technology Stocks : CMGI, eBAY, AMZN, AOL - When will the pain end?
EBAY 28.86+0.3%2:31 PM EDT

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To: Webfoot who wrote (9)6/15/1999 12:33:00 AM
From: paulmcg0  Read Replies (3) of 47
 
It means that YOU have a buying opportunity.

I imagine that people were saying that during the market crash of 1929... Are you trying to encourage people to buy Internet stocks so you can unload your own holdings?

I think that the ongoing collapse of Internet stocks is a harbinger for the whole stock market. Stocks in general are overpriced by any historic measure -- for example, how far do you think the S&P 500 has to drop from a current P/E ratio of 36 to reflect its long-term historical P/E ratio of around 14?

You're probably familiar with the Greater Fool Theory, which says that people buy stocks in the belief that someone, who is a Greater Fool than they are, will pay more for a stock than they did. But why would someone? Why would I pay you for something I had no interest in owning?

There is no guarantee that someone will come along and pay you what you think your stocks are worth. There have been numerous stocks in the past that have dropped 90% or more from their all-time highs, and never recovered. The stock markets are an arbitrary social construct, reflecting prices that people agree on at a particular time. You might want to read Prof. Elton McGoun's paper "Hyperreal Finance", online at les.man.ac.uk for more about this concept of financial markets as a form of virtual reality.
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