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The market always, in theory at least, looks ahead. And it's always trying to take in every bit of information that it can as quickly as it can. You don't really care so much if the company made a dollar last year; you want to know what it's going to make this year.

To know whether stocks are cheap or pricey, we typically look at price-to-earnings ratio. Valuation is a tougher question than many folks realize.

Investors covet past improvements but also always believe pricing unimaginable future creativity and efficiency gains is Pollyannaish. And they're always wrong. Bet on it.

There's a certain degree of speculation that goes into valuations. In so far as the market supports a valuation, everyone who gets a great one deserves it, but they should also be cautious because that speculation is temporary. I saw Yahoo go from $100 billion to $10 billion. It's not a long-term measure.

I couldn't have predicted the business would be worth so much. I could see that we would have this sort of market share, but I didn't realise the numbers would be so large.

I was about thirteen when I started thinking about the stock market. My dad helped me a little bit. I'd see it in the 'Santa Barbara News-Press.' These prices would change every day - what was that all about?

Approaches to determining stock values vary, but fundamentally, each company judging itself undervalued is saying that its future stream of earnings justifies a higher price than the stock market is willing to accord it.

I mean, price is price. It's just where you want to spend your money.

We really believe in the earnings. We're very proud that often we do well in the down market. But you know, there are some markets where they just lose liquidity, like 2001, 2008.

In an efficient market, at any point in time, the actual price of a security will be a good estimate of its intrinsic value.