To all the scared puppies:
From tonight's Fool Mail--
<snip>
Young companies almost always have the most volatile stocks, and all
pure-play online companies are young. The business models are uncertain,
the
valuations granted can border on random, and the competitive landscape is
undergoing tremendous daily change. Add to this newly-arisen momentum
investors and even more volatility is present than in the past with young
companies -- volatility to the upside, and to the downside.
So, today shouldn't come as a surprise -- at least not to readers of this
column. To treat today as if it were unusual (we've seen volatility like
this before, and we will again) is hypocritical. We repeat ad nauseum that
our investments are and will be volatile. Amazon has lost over 50% from its
high more than three times for us. AOL did the same in the past and has
nearly done so again. Excite@Home joined the 50% Club last week. eBay
nearly
has, too.
Considering the names just listed, this is a respectable club, not a motley
slew of third-tier companies. I don't believe that any of our companies
have
seen their best days yet by a long shot. As we wrote here one month ago,
these companies' stocks could be net flat for the next four years (you
never
know), but brighter futures likely stretch ahead for the many years beyond,
years turning into decades. And that's what we invest for: years that turn
into decades. An investor shouldn't buy anything (at any price) unless they
plan to hold it for year after year. This is especially true with new, much
less predictable companies.
And our companies are not very predictable. But the more volatile that they
are in their business practices (representing the act of taking chances),
and the more volatile their stocks are (representing that they're being
noticed), the better. In fact, if our stocks weren't volatile we would
probably be doing something wrong. Rule Breakers by definition are
volatile. |
