Polly LaBarre (plabarre@fastcompany.com) is a Fast Company senior editor based in New York City. Contact Pip Coburn by email (phillip.coburn@ubsw.com).
Are you looking for a simple way to explain to puzzled colleagues or to nervous investors how Wall Street works when it comes to high-tech stocks? Phillip "Pip" Coburn, global technology strategist for UBS Warburg, has created a cheat sheet that explains his perspective on economic value in the Internet economy.
1. Technology stocks should be volatile -- and Internet stocks should be more volatile.
2. Tech-stock valuation is about discounted cash flow, in a warped sort of way.
3. The public market in Internet stocks is essentially a form of upscale venture-capital activity.
4. Upscale VC activity is inherently more volatile than traditional tech.
5. Markets obsess on short-term data points in order to determine correct long-term growth vectors.
6. The right brain is winning over the left brain.
7. There is little upside limitation to the values of the most successful Internet companies ...
8. ... but there is little downside protection to the values of companies that don't succeed as planned.
9. Will valuation get easier as time goes on? No.
10. Will tech and Internet stocks become less volatile? Absolutely not.
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