Greetings brave short-sellers!
While I believe that lots of $ can be made shorting the net stocks, I would like to point out that most of these stocks are still in post-IPO stage, have never settled into an equilibrium, and thus 'traditional' charting techniques as well as fundamental analysis are less useful in prediction here than in other more mature areas of the markets (where prediction is far from easy to begin with I hasten to add!)
Now, for every argument one can make against a particular net stock, another can be made in its favor. And the great argument for the portals and ecommerce stocks, as well as for any internet-based service, is that they are like software products . . . everyone hopes to have the killer app. In the case of AMZN they might be correct. Apparently AMZN _is_ obliterating the competition in terms of quality and service. The stock price . . . only time will tell, but I suspect it will be 3 - 5 years before the leading net stocks begin to conform to more traditional valuation models. In the meantime the share price will swing wildly based on the fear/greed dynamic.
Make no mistake however . . . the fact that 'anyone can do a web site' or 'anyone can create a web portal' is no more significant that saying 'anyone can create an operating system for intel microprocessors'. The analogy is perhaps strained, but nonetheless, the facts remain that in software, and probably in 'online apps' as well (yhoo, amzn, etc.) the traffic and thus ultimately the profits will gravitate to the few who do the best job; all others, the also-rans, however well-conceived in their own right, will be truly dismal investments. It is inherently a high-risk/high-reward endeavor.
I short, while I am naturally inclined to short-selling, especially stocks with no earnings or P/E of 2000 etc., market conditions and the specific case(s) of the leading internet companies within the stormy (and swelling) internet sea force me to conceive of short positions in these stocks only as very short-term plays, unless adequately hedged and covered, in which case they are only marginally more interesting than more traditional investment vehicles.
But you don't need a ticket to vegas to long or short the net studs. Big plus in their favor . . .
As to price, it is interesting to see the foaming at the mouth as AMZN declines from 140 to 110 or whatever . . . how many are as impressed when a stock declines from 14 to 11? Or when the shares of an obscure company move from 22 to 28? I have no position in AMZN, but if I were short and had profits I might well take them here. It may not be quite the slam dunk many think it is. . . .
Thanks to everyone for the diversity of views and great information.
Best wishes and happy investing
d.r. |
