Theoretically, the price of stock should reflect the net present value of the future flow of dividends utilizing a risk adjusted discount rate. Nevertheless, certain stocks such as Google have phenomenal price to earnings ratios. Discuss why the price-to-earnings ratios are so high and what the justification may be for their stock prices.

Comment on:

High stock prices reflect higher earnings growth.

Some believe the stock prices are unrealistic and rely on the bigger fool theory.

Recall the tech bubble bursting after March 2000.