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Strategies & Market Trends : MDA - Market Direction Analysis

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To: MulhollandDrive who wrote (19768)	7/9/1999 2:07:00 PM
From: Michael Watkins	Read Replies (2) of 99985

Granted, the whole thing is toungue in cheek, but overall I think the message has been pretty true -- throw money at most internet stocks and IPO's over the past year and you made money. My problem with it is you made money whether the company has a chance to make it in the real world or not. I have no doubt some companies will be viewed as visionary in history. Many more will be viewed as scams and frauds over time. I've been in the IT business since 1980, followed the whole personal computer revolution (was part of it, enjoyed it, felt strongly that it was going to make a difference). I was making my stock bets in 3COM and Dell and Compaq (now morphed into others) back in the days when mainframers would whip out their big disk drive bearings and laugh at my entire fixed disk being smaller than their bearing shaft. Size apparently didn't matter and many of those people are now in the PC biz in one way or another. I worked for a big iron vendor which now sells more NT boxes than anything. I have been involved in the internet for many years as a user and as a vendor of internet related products and services. I feel strongly that it is and will continue to make a big difference to many people in the world. But I don't see it bigger than PC's or computing, as some would have you believe (McNealy and Ellison principly). It will appear to be bigger, but at some point will be a commodity like PC's have become. It make take a long time before that is reality and recognized - I recall feeling PC's would turn into a commodity as early as 1988 but it didn't actually happen until a couple of years ago, in conjunction with the internet frankly driving demand. Calling the top of the internet may be just as difficult but one thing about it that is different is the accessibility to new "innovators". There are already too many people vying for the same eyeballs. Too few truly new ideas coming out, and the new ones can be adopted and coopted by established players with relative ease. A team of programmers and a marketing department is all that is needed in this new world. Not like the bricks and mortar companies. The low cost of entry to internet biz and the speed at which it can be done will see a sorry string of poor quality companies rise and fall in record pace. Being listed is their only salvation as they can string the misery out longer, but it will be individuals that pay the price. Some people natually will assume this is terrific, but my feeling is that too many are drawn to this apparently easy money like moths to a flame or light. Why in Canada we have mining companies turning themselves into electronic brokerages and such. Biggest one day trade volume in Canada on one exchange this year was a gem mining company that announced an internet strategy and hired an ex PSI*net manager. The whole concept is going to be overbought and not all the companies are going to survive. I haven't spent much time thinking about how this will all turn out - maybe the big media firms that have appeared to be slow on moving to the net have something in mind - let the weak hands destroy each other or dillute the market -- and then come in with essentially free offerings (because they can afford that same team of programmers and marketers indefinitely without making hardly a dent in their regular balance sheets) and tie the rest in with their holdings in ways that make sense. In the meantime I'm happy to make money from the CSCO's of the world and other plumbers that are making real coin selling products to enable all this other stuff. I have not really thought this out and pardon eveyone's indulgence to my ramblings. Sometimes my ramblings have some value even when I'm completely off base. Cheers Michael

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