A look at the value of tech stocks and that of others. Isn't a dollar of earnings still a dollar regardless of what industry you are in?
It seems today that many people think that one companies dollar is better than anothers. Companies in technology companies are valued much more than the others. Some of the growth and other figures are not much different than some non-tech companies, but participants are saying that tech money is worth more than non-tech. Maybe I'm crazy, but I still believe that a dollar is still a dollar. A dollar of earnings from an internet company is worth just as much as a dollar from a non-internet company. That brings me to another point which is the lack of dollars in many cases. Companies that are worth billions and continue to struggle to make money will eventually cease to exist on their own. Investors will stop funding ventures that have shown to be unprofitable. Some will be purchased by companies to expand services, products, etc. And, many internet companies will probably be purchased by other companies that are profitable and many more will fail. The buyout factor will probably sustain some of the stock values of these money losers, but the fact that even more will fail will keep these stocks low. These companies that fail, and are not absorbed by others will fail on their own and will fail after running out of money. The fear of being one of these investors will probably keep many out of this area. The internet does much for the economy and is great for consumers, but not neccesary for investors as automotive, and airplane companies have been in the past. For the economy, it doesn't really matter that many internet companies lose money because the money is circulated throughout most of the U.S. economy and these companies have made things more efficient for the economy so that things can be done in less time and/or to lower costs. However, losses to investors does matter. In an Fortune article, Warren Buffet has shown that at one time their were over 2000 car companies. Well, we all know that there were only a handful that survived. He also claims that over 129 airlines in the past 20years have filed for bankruptcy. These two industries have revolutionized the way travel is done and have done enourmous things to making the country more efficient, yet they have failed investors. And, the remarkable thing is that many of the car companies back then shared a similiar resemblance to internet comanies today by calling themselves motors after the origninal names as in comparison to dot com with internet companies. Source:Fortune November 22, 1999
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