valuations

[Henry C.K. Liu]

If a comparison to real estate is valid, there should be real estate taxes for
100% corners on the internet.
Also, there is such a thing as book value on established companies that provide
comfort to investors.
What we are seeing is a new social asset and its potential in the process of
being privatized at great profit to a few.  It is surplus value created not by
the classical relationship between workers and capital, but because consumers
and distributors.

Henry C.K. Liu

Nathan Newman wrote:


> -----Original Message-----
> From: Doug Henwood <dhenwood at panix.com>
> To: lbo-talk at lists.panix.com <lbo-talk at lists.panix.com>
>
> >[Quoting perma-bear James Grant makes me almost as queasy as evoking 1929,
> >given how (engagingly) wrong he's been over the last 15 years. But this
> >stuff is truly nuts.]
>
> I generally do think the Internet stock valuations are nuts, but the reality
> is that stock ownership is really not ownership of property value but is a
> claim on profits.  The reason this is critical in Internet stocks is where
> profits are being derived.  A chunk of value for all these firms is based on
> squatting on publicly funded goods - mostly the Internet itself - at
> strategic points and getting wealthy as foot traffic explodes.  This makes
> much of the investment more akin to real estate speculation than to normal
> revenue-sales analysis.  A square foot of land at what becomes St. Louis (to
> use a Henry George example) can expect astronomical returns pretty detached
> from the original price paid for the land, because the value is based on the
> social dynamics in which the land/Internet stock is enmeshed.
>
> The flip side of course is that most land speculated upon ends up being
> worthless.  Some of these Internet stocks may be worth what people are
> paying, but all of them almost by definition cannot be.
>
> Aside from the real estate analogy, the other reality is that their value is
> partially derived from converting public knowledge into private goods
> protected by intellectual property laws.  In that sense, the stock market
> may be implicitly betting on the returns to the real dollar value of
> investment by the public that some of these companies have managed to
> privatize for a song -- I mean algoritm.  Netscape was a classic case of
> this, robbing the intellectual property of the University of Illinois and
> CERN, and creating a private commercial result it could own.  Only the fact
> that it meant an even nastier IP leverager, Bill Gates, did its juggernaut
> get derailed.  (It's worth remembering that Gates is basically an IP
> leverager; he got his start demanding copyright protection for his BASIC
> programs, software created under a NSF grant by university professors.)
>
> So traditional valuation comparisons with industrial concerns of the turn of
> the century may be poor analogies.
>
> --Nathan Newman