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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

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Cambrian.com
Why the Internet is the best thing since the dawn of complex cell life
By STUART WHITMORE

November 5, 1999
Web posted at 12:30 a.m. Hong Kong time, 12:30 p.m. EDT


    INTELLIGENCE
The View From the Far North
How the North Korean military sees itself - and the world
- Thursday, Nov. 4, 1999

Is Hong Kong Open Only for Business?
Two Approaches to the City's International Character
- Tuesday, Nov. 2, 1999

The Week Ahead: Hong Kong's Disneyland
An announcement on major theme park expected
- Monday, Nov. 1, 1999

Technology: Thanks for the memory
How I became a computing space hog
- Saturday, Oct. 30, 1999

No Jail, Please
Thai bankers want to look forward not back
- Friday, Oct. 29, 1999

Mark the Ides of September
When will Chuan call elections in Thailand?
- Thursday, Oct. 28, 1999

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Hands up if you understand Internet stocks.

Liar. The lottery we call the Net stock market has been making chumps out of pretty much everybody since dot-com fever first incubated and an intrepid investor coughed "buy."

This creates a problem for economists, who hate nothing more than being stumped for a charts 'n' graphs-backed answer to the question What's Going On. In the last couple of years the old metrics have been junked in favor of a slew of shiny new analytical tools. And still the tech-heavy Nasdaq market was able to plunge last week only to rise to a new high this despite Federal Reserve chairman Alan Greenspan shouting "duck!" before the uptick.

But you know you're really in trouble when a respectable stock analyst stands up and tries to explain the chaos on Nasdaq by evoking the spirit of Cambrian era.

In the interests of science, Asiaweek moderated a panel discussion at today's session of Internet World Asia in Hong Kong, inviting three of the region's top Net stock analysts. Jay Chang of Credit Suisse First Boston, Rajeev Gupta of Goldman Sachs and Frank Au of Lehmann Brothers all took up the challenge of explaining the "How's and Why's" of Internet stock evaluations.

To be fair to Chang, the analogy with the growth spurt of the Cambrian (when Mother Nature sparked a bull run on complex cell life) was initially made by Jeff Bezos, founder and CEO of top online retailer Amazon.com. But the quotation was symptomatic of the lengths he and other analysts are having to go to to rationalize Net stock mania.

In the space of a 50 minute session, Net stocks were likened not only to vast tranches of geological time, but also to today's real estate market. We heard about The Six C's and The Seven Golden Rules. Gupta argued that Internet companies are so different to traditional ones that far from being overvalued, four-year-old Yahoo! is a bargain buy compared to stately banking giant HSBC. He was followed by a declaration from Au that the firms of the new economy should be evaluated just like those from the old one.

Not that the pundits disagreed too much. Rather with trusty tools such as p/e ratios rendered useless when there is no "e," each has been driven to develop new rationales for favoring one stock over another -- to find different ways of placing calculable numbers on scary intangibles. The underlying chapter and verse of every analyst remains that these are very early days, predictions are hard and all plays are high risk.

The spirit of Peter Lynch, the Godfather of gut-feeling, common sense investing was invoked. The best investment bets are companies with a product or service people really want and managers who can deliver. Simple. Companies like eBay, the online auction firm that is the second most visited shopping site on the Web and has a market cap. of $17 billion to prove it. That will be the same eBay that I first wrote about back in August 1997, when it was a small player called AuctionWeb. My gut feeling at the time? It'll never catch on. Go figure.

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