Chuzz, would love to hear your comments on the following post if you have time (from the Qualcomm thread):
To: Voltaire who wrote (53162)
From: Kelly Kammeyer Wednesday, Dec 8 1999 10:01PM ET
Respond to Post # 53179 of 53194
<There is a very subtle glacier like movement taking place in the market and it is part of the new paradigm.>
Voltaire,
I discern three drivers of this movement, and they may not be obvious to the casual observer...
1) The current environment of rapid disintermediation, destruction, and reconstruction of businesses, demands that premium value be awarded to those businesses that "get it" at the expense of those that do not.
2) The expanding availability (Reach and Richness) of relevant information for investors, is dissolving much of the risk involved in buying great businesses. Since we know that the net present value (share price) of a stream of future cash flows (earnings) grows exponentially with declining discount rates (risks) applied to those cash flows, higher values for the best businesses are a fait accompli.
3) Similarly, the net present values of these companies are exponential with the growth rates of their cash flows, and therefore their PE ratio's logically ought to expand exponentially, and are continuing to do so.
In my view, the combination of these factors yield the oddly unfamiliar market you describe...
More and more investors and their vision for stocks no matter how few are coming at the market from a nonlinear and intuitive mode...
Kelly |
