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Technology Stocks : Red Hat Software Inc. (Nasdq-RHAT)
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To: Mohan Marette who wrote ()8/13/1999 12:49:00 AM
From: Norman Stone  Read Replies (2) of 1794
 
Short or long? When the curve flattens, how many shareholders are going to cash in for the quick money, and move on to where the fresh action is? And when the price begins to drop, how many buyers above $60 are going to believe in a quick recovery?

Typically, in a fast moving IPO, a quarter of the money is ready to cash out when the first peak has been reached. Another quarter will follow when the slope threatens to erase all gains. "Second-half" gains are thereby cancelled in the first retrenchment. Longer term money waits patiently in the wings until the gladiators and the lions have killed each other off. They will take small positions at the new base, but wait for further erosion.

The only question is "when and where is that peak?" It looks like 80 is the ceiling.

I am long Red Hat (I even own shares of Apache, silly me), but nothing dissipates more quickly than unfounded optimism. Red Hat is an unproven player, so its current value is strongly dependent on its short-term slope.
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