The end is near?
December 16, 1999
One Week View
Acampora bullish on Internet stocks
By J. Alex Tarquinio
NEW YORK. 1:50 PM EST-The man who predicted Dow 10,000 says it's not over yet. Not only does he think the wider stock market is going higher, but he sees more room for growth in the already lofty Internet sector.
"These people are not making hula hoops. This a real industry and it will always be there," says Acampora. He compared Internet stocks with railroad stocks at the end of the 19th century. "In every new industry everybody gets into the act and there's a huge shakeout most of the companies don't survive. But that doesn't mean the Internet isn't a major new force."
To be sure, Acampora is not a name you associate with the Internet. But he is known for going out on a limb. Prudential Securities' widely watched technical analyst was scoffed when he first predicted in 1995 that the Dow would rise to 7,000.
He says the latest run-up in Internet stock valuations is not necessarily a sign that this is a bubble. "I hate the word bubble because it means that imminently this thing is going to blow up in your face," he says. "Sure, every bull market has a speculative binge. I just don't think this is it."
Acampora applies technical analysis to explain the high volatility of this sector. "Yes, we're going to have some nasty corrections," he says. "Look, the Internet peaked in April and then dropped 50% by August. And now it's on it's way back up. But rotation, expansion and contraction are very healthy signs of a bull market."
But this doesn't mean that he's oblivious to some of the stratospheric valuations for specific Internet stocks. "Of course these little dot-coms are going to merge, they're going to go out of business. There will be a shakeout--that's all. And we'll move on," he says.
As for stock holders in individual Internet companies, he acknowledges that they're taking a big risk. "They aren't buying earnings, they're buying a concept. And that's okay. But this is where greed comes in, and the concept of a bubble comes in. They have to have some sense," he says.
But even though he sees some stomach-turning times ahead, Acampora says he ultimately sees the overall market cap of Internet stocks going higher.
(this piece is from Forbes)
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