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Politics : Idea Of The Day
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To: IQBAL LATIF who wrote ()8/27/1999 4:35:00 AM
From: IQBAL LATIF  Read Replies (2) of 50167
 
There's Still Trouble Ahead
By K.C. Grainger, Grainger Beaulac Inc.

What came as no surprise was the murderous declines in AMERICA ONLINE (AOL) and YAHOO! (YHOO) recently. Bob Morrow had forecast the drop in the July 15 issue of The Internet Analystsm. His projections almost perfectly hit their downside target.

After a stock hits an upside or downside target, it should either reverse itself or continue its trend. The Internets mentioned above reversed and have had some upside moves. But we're not out of the woods yet. Very often, when a major institutional and high-profile stock corrects downward in price to less than half of its multi-year high, as YAHOO! and AMERICA ONLINE have done, it takes four years to again approach the original high price ? and that's if everything else goes well. A common stock pays dearly for selling at ludicrous overvaluation. It will probably take four years for both YAHOO! and AMERICA ONLINE to return to their multi- year highs. The minimum period would be two years, but that is extremely rare.

Bob Morrow and I do anticipate Internet rallies, but not much on a percentage basis, since we believe that the Dow Jones Industrials should drop to the 9700 level soon. The Internets should perform poorly during the decline. Later we expect good performances, but only from selected Internet stocks. ?
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