Despite persistent concerns about lofty valuations, investors continue to bid up share prices to the surprise of many on Wall Street.

Of course, since apartment REIT's have posted double-digit returns in five of the last six years, some analysts think these investments are now trading at lofty valuations.

But the lofty valuation shouldn't be a problem, said Mr. Ballen, whose fund had an annualized rate of return of 24.9 percent during the 1990's.

But 1994's tough market was bound to come along sooner or later, and it pulled down lofty valuations to more reasonable levels.

But isn't Mr. Arnott's and Mr. Bernstein's pessimism simply a consequence of the market's current lofty valuation?

They were able to raise large amounts of money as investors bestowed lofty valuations on their budding companies.

EBay and Yahoo, other leading Internet companies, also trade at lofty valuations, and many smaller Internet and technology companies have risen sharply since their lows in the fall of 2002.

But Mr. Jones observed that the stock's lofty valuation made far different assumptions.

Despite Nortel's lofty valuation, he said he likes it for long-term investors.

Even great companies like Cisco couldn't possibly justify their lofty valuations.