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Recorded from the radio: Interview with Frits Spits in the Radio Show "Time for Two" - 14 March 2001 

HK:

…had falls which were bigger than 10%, which come totally out of the blue and no-one was expecting them. And then you suddenly see the markets dropping by 30, 40, 50%.

FS:

Yes.

HK:

And that is, I wouldn’t say common, but it is happening at the moment. Just look at …

FS:

What makes you say we are witnessing a disaster?

HK:

It is very clear. Let us take an example: the covered wagon. When the industrial era dawned, trains, cars and finally planes made the covered wagon redundant. It wasn’t that the man who drove the covered wagon was not doing his job properly. It was just that we had entered a new era. And that is also the case today. We are dealing with a flash economy, the digital era. And if we simply continue – and that is a crucial mistake – valuing listed companies in the same old way, in other words by their book value, we are valuing them in the wrong way.

FS:

And currencies?

HK:

You need to analyse the market value, and that is the mistake, the misconception of our time.

FS:

Yes.

HK:

I see that very clearly.

FS:

Mrs Koornwinder, may I interrupt you for a moment. What is the difference between market value and the other value you were talking about?

HK:

Company value, book value, those are the financial details you can read in the annual report. Well, we all know by now that if you comb through an annual report and base your expectations on what you find, you will not be on the right track. Yet the new companies of the new economy are still being valued in that old view.

FS:

And they should be basing themselves on new values. That is what you really want to say and that is the mistake which is being made?

HK:

That is the mistake which is being made.

FS:

People are not doing that.

HK:

We saw it with Maurice de Hond. I conducted a study. Worldwide, the new economy funds, the TMT, technology funds, internet funds, have fallen. Not just in the Netherlands. So we are dealing with something structural. If we analyse them in the old way, in other words by their book value…

FS:

Things go wrong.

HK:

Then at a certain point those companies float themselves on the stock market. And they think they have made it; now they have cash and they can expand. But now they are listed on the stock market and if the markets are going through a bad patch, prices fall, and the prices of good companies fall too. And then sooner or later it is their market value which decides their fate.

FS:

Mrs Koornwinder, your message is clear. We need to apply the new laws if we want to get to grips with falling markets. That is what you are saying.

HK:

Exactly.

FS:

You have explained it clearly, Mrs Koornwinder. I hope everyone is listening. Thank you very much for your time.

HK:

My pleasure.

FS:

Good afternoon.


   
 
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