Financial bubble revisit Message Board

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Strategies & Market Trends : Financial bubble revisit

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To: pcyhuang who wrote (2)	8/6/1999 11:49:00 AM
From: The Other Analyst	of 3

OK, I see your first post (not the one you linked to) was about the Internet bubble, with a nice article by Roger Lowenstein from Smart Money. The article included some good points about how sophisticated investors who believe the Net stocks were overvalued have nonetheless been playing them, just as sophisticated investors did in the 1720 South Sea Bubble. We are now (at August 5) off 40% on the DJ Internet index from the April 13 peak. Is this the end of the decline? I think not. I think first we need to see many cancellations of Internet IPOs in the pipeline. The decline is great news for almost everyone. (Yes, there are losers--the poor people in Atlanta who were killed by the beserk daytrader.) But this is a good thing for most people. It will cut off the flood of capital and management talent that is threatening the existing Internet companies with too much competition. It will give young Internet investors lower prices at which to buy, and so more wealth when they retire. It will do more for investor education than pious warnings about reading the whole prospectus before you invest. And it will slow or reverse the sucking of talented people and scarce capital out of the rest of the economuy, where they are still needed.

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