So the real question is, how long can this go on? Let's turn to Fleck...
"All in all, it was just another classic day in the blow-off to the
biggest mania in the history of the world. Everything continues to be as
it has been, only more frenzied and crazier. I saw where someone made
the point that we used to talk about stocks being up a quarter and we
meant a quarter of a point, and these days it refers to the fact they're
up 25 percent, which they are routinely.
"I'd like to make an observation. It seems that there is no stock market
these days excluding technology, with excitement focused on PCs,
different varieties of chips, chip equipment, the Internet sector and
all its various segments, Linux, telecomunications, etc. There only
seems to be rotation among tech sectors; there never seems to be any
money actually going out of tech. So the entire speculative forces in
the market are directed to one sub-industry that has, of course, now
ballooned rather big.
"The pressing need for performance and to show the right stocks in the
portfolio at yearend, coupled with the natural speculative juices of
traders looking for stocks in motion, have put a tremendous amount of
upside pressure on all things technology, regardless of fundamentals."
Aw, he's just jealous. :)
> I have a lot more cynical comments about the venture capital
> "process", and I even typed them up, but changed my mind and deleted
> them. Maybe some other time.
Anytime you want to spake thusly, feel free to put my email address on
the to: list, even if you're not FoRKing it explicitly.
I do like to think of CMGi as *the* indicative company/stock of this
era. My friend Mike Renshaw sent me the following on Thursday, and I
laughed and cried when I read it. [Note in the ultimate irony that
Akamai, the company mentioned in the article below, struck a deal with
CMGi on Friday that sent AKAM's stock soaring as high as 298 yesterday.
And to think, we knew this feisty little $27 billion startup back when
they were a graduate student and his advisor asking a certain W3C member
what he knew about caching... :]
> Domo-arigato, CMGi.
> How is this (see below) different from the incestuous
> valuations of real estate and stocks in Japan in the
> late 1980's? One absurd thing is used to justify
> something even more absurd. It becomes a
> self-fulfilling prophecy.
> Note that not once does the poster mention earnings.
> He just uses one overvalued stock to justify another.
> Man, I wish that I never said that I wouldn't post
> again, I could tear the logic used in this post to
> shreads. But what does it matter? The poster
> probably just doubled their money while I lost all
> mine [shorting CMGI at 100, with the stock now at 210].
> ----- Motley Fool CMGI post #26366 ------
> Now [CMGI] are starting a 1 billion$ venture fund of
> which they will own 100%. If you take their historical
> returns on venture investments, I forget what the
> number is, but as I recall it was much more than the
> 1200% gain on their publicly traded investments in
> this one year. But lets just say it's 1000% per yr.
> Take that 1000% per year, which is the same as a
> 10-fold increase per year, and multiply that over 2
> yrs. and you get a 100 fold increase over the value of
> th original investment, which in this case will be $1
> billion. So you take the $1 billion that they will
> invest as venture capital and multiply it by a 100
> fold increase over 2 yrs. and you get a whopping $100
> billion in value created over just 2 years.
> That is just an example of course, and it might sound
> outrageous, but let's compare that to what is
> currently happening with some internet valuations.
> Take Akamai. As I remember reading about it, this
> company was only formed a little more than a year ago.
> Let's just say that the original venture capital put
> into the co. was $100 million, and maybe it was less
> than that. And lets say that this $100 million was a
> 100% stake in the company at that time, so this
> includes whatever stock in the company that had been
> created. So in a little more than a year this $100
> mill. has grown to a mkt. cap. of about 20 BILLION!
> Now the 1 yr. return on investment in this case would
> be 20,000%, or a 200 fold increase in value. All of a
> sudden a 10 fold increase in value per year sounds
> possible. And even if you think that the valuation of
> Akamai is ridiculous, what about the fact that Cisco
> was willing to pay -- what was it? 7,8,9,10 billon? --
> for that 2 yr. old networking company that they bought
> a few months ago. So apparently that much value can be
> created that quickly.
Top 10 Slogans I liked from
from the home office in Tim Byars' basement...
10. We are using Linux daily to UP our productivity -- so UP yours,
9. "When you say 'I wrote a program that crashed Windows', people
just stare at you blankly and say 'Hey, I got those with the system,
*for free*'." -- Linus Torvalds
8. The nice thing about Windows is - It does not just crash, it
displays a dialog box and lets you press 'OK' first:
7. In a world without fences who needs Gates?
6. Failure is not an option -- it comes bundled with Windows.
5. Microsoft should switch to the vacuum cleaner business where
people actually want products that suck.
4. At Microsoft, quality is job 1.1a service patch 3 - Use Linux!
3. Gates' Law: Every 18 months, the speed of software halves.
2. I'm not in favor of senseless Micro$oft bashing. I'm in favor of
bashing Micro$oft senseless.
And the Number One Slogan I liked from
1. Windows 2000, Users Zilch.