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Quotes of the Week

April 26, 1999

Eventually the value of all assets must confront the law of economics. This law dictates that the value of any asset must be tied to the future cash returns paid to the owner of the asset. This law does not say that Internet stocks are necessarily overpriced. It does say that we must take a hard look at the valuations of these firms and decide whether their current prices realistically reflect their economic potential.
Jeremy Siegel in Are Internet Stocks Overvalued? Are They Ever $$ from the Wall Street Journal (4/19/99)

The problem is that recent returns, whether from one week or the old standby three years, don't predict future results. Nothing predicts future results. The best you can do is to hold on to low-cost, diversified funds and be oblivious to short-term static. We did tell people that. But we were preaching buy-and-hold marriage while implicitly endorsing hot-fund promiscuity. The better we understood the industry, the sillier our stories seemed . . . Unfortunately, rational, pro-index-fund stories don't sell magazines, cause hits on Websites, or boost Nielsen ratings.
"Anonymous FORTUNE Writer" in Confessions of a Former Mutual Funds Reporter (4/26/99)

Diversification for investors, like celibacy for teenagers, is a concept both easy to understand and hard to practice.
James Gipson (Clipper Fund) in Traditional Fund Ideas Are Once Again Timely $$ from the Wall Street Journal (4/23/99)

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