The debate over how to properly value a promising new company is as old as the stock market. While many Wall Street veterans say small investors have bid Internet-related shares to absurd heights considering that few of the companies have yet shown a profit, many individuals see things differently.
Merle H. Horwitz, a 70-year-old West Los Angeles investor who has been active in Internet stocks, argues that "an entirely new world is developing, and we will clearly have to go through some growing pains ... but it seems likely that certain Internet companies will flourish and that the stock prices will too."
Wall Street traditionalists, he contends, "do not have useful data to measure our new world."
Few pros doubt that, long term, successful Net-related companies will have vast earnings potential. Much of the criticism leveled at the Net stock mania today focuses on the fact that the market seems increasingly dominated not by individuals taking the long-term view, but by an army of small-time speculators addicted to rapid-fire trading.