A sincere plea for anyone considering shorting tech or internet stocks in today's mania climate:
YHOO at 100, 200, or 300. It makes absolutely no difference. Once a company trades completely out of the realm of fundamentals, it is COMPLETELY under the control of mob investing.
State lotteries collect over 15 billion dollars per year, from tens of millions of "investors" who are willing to put down money for a 1 in a million chance of ever seeing that money again. You and I might never invest in a lottery ticket, but your neighbor certainly would- and DOES.
Most lottery buyers have never met someone who won the big bucks, but almost any stock buyer knows someone who made big bucks by buying internet stocks. Do you think, for a moment, that these potential buyers are going to even hesitate in buying shares of worthless internut stocks in the hope that they'll double their money?
Do you think you can fight against all those people, and every single analyst on wall street who's job it is to SELL the public that stock?
We all know the internut companies don't make a dime in profit. That DOES NOT MATTER. These shares are lottery tickets, pure and simple. The only difference between today's market and the market of 10 years ago is that anyone with a modem connection can join in the fun and press the "market buy" button.
Face it. This mania will NEVER end. The supply of greater fools is so large that you'll probably be retired or dead before they run out. Even if the market corrects 90%, there will be a flood of people who will buy back into these stocks because the "chance" of making it big is STILL larger than a lottery ticket.
I'm the biggest bear on internet stocks you will ever find. I live in the valley, and I know dozens of people who work at, and run public internut companies. I hear them joking at parties about how they can't believe they got away with their IPO, and they can't believe how they just bought a new porsche, or they can't believe they just sold 10 million dollars worth of stock while their company has never earned a dime. Employees right and left quit as soon as they cash in their options- they have no commitment to the company long term whatsoever.
But NONE OF THAT MATTERS. You cant fight the population of america, the lottery ticket buyers next door, who will buy these shares until the end of time.
Just give it up. Hold your nose, close your eyes, and buy calls. Don't even THINK about going short a stock unless you know the CEO just got arrested for murder 3 hours ago, along with a passport to switzerland, a suitcase full of cash, and a one way plane ticket. Unless you've got that kind of insider information, IT DOES NOT MATTER WHETHER OR NOT THESE STOCKS ARE OVERVALUED. |
