Jordan, of course Yahoo doesn't pay dividends. But don't you think that investors have an expectation that in the future they will pay dividends and/or do stock buy backs (essentially the same thing as paying dividends)?
Don't investors expect that SOME DAY earnings will be returned to investors in these stocks? Even if you're buying stocks for pure speculation, there must eventually be, at the end of the chain, someone who believes they are going to actually get a pat back from the company. The reason no one knows what to value these stocks at now, is that they have no idea how much these companies will be making down the road. A lot of people think they'll make HUGE amounts of money. But my question is, "Does anyone really think that Yahoo will ever make enough return to investors their $400/per share investment from way back in 2000?"
Even if everyone today if buying for pure speculation, and no one cares about earnings, there still has to be a groups people in the future who will by for earnings. There are only so many people in the world to be the greater fool. That's why all pyramid schemes in the end colapse.
-Zack
> -----Original Message-----
> From: owner-lbo-talk at lists.panix.com
> [mailto:owner-lbo-talk at lists.panix.com]On Behalf Of Jordan Hayes
> Sent: Thursday, January 06, 2000 2:12 AM
> To: lbo-talk at lists.panix.com
> Subject: RE: thegreatcrash.com press release
>
>
> From zee at ix.netcom.com Wed Jan 5 07:55:00 2000
>
> >You'd have to define "proper valuation" first. Go on: I dare you.
> >How much *should* this market be valued at? And what makes your
> >measure right?
>
> Let's pick one high flying stock just to get our lines
> reasoning clear and then see what we can say about the
> whole market. How about Yahoo.com? Even though they've
> lost 20% of their value over the last 2 days, they're still
> at 410 right now. How much would they have to pay in
> dividends to make your ownership of their stock profitable
> over, say, a 40 year period?
>
> Ha! You fell for it!
>
> Yahoo doesn't pay dividends, so why on earth would it be "valid"
> to "value" it's stock based on a dividend stream? Similarly, since
> there's no dividends, what do you care about their earnings? They
> aren't sharing any of their earnings (or losses, for that matter)
> with you as a shareholder -- so why do you think this is the way
> to "value" a stock?
>
> /jordan