Amen, brother. Anyone who listened to my various posts over the last year would have known that the vast majority of internet IPOs are nothing but financial scams. I live in the valley, I've got friends who work at these companies, and I've got a few friends who are the freaking CEOs or Chief Technology officers. The thing I'll never understand is how the public never managed to catch on that these were all complete frauds. I mean, just hanging out at one vest-fest party with a hidden microphone should have been enough to blow this whole bubble apart- but with the mania and greed in the air nobody would have listened anyway. I can't claim that I know execs at ALL the recent internut IPOs, but I can say that every single exec I do know (probably a dozen or so) will admit freely after a few beers that they can't believe they've gotten away with it. These people feel like they've just robbed a bank. None of them ever gave a moment's thought or effort in running a profitable business- at least not in the way "profit" was traditionally defined. Everyone involved with this gargantuan fraud knows that the real money is made through selling stock, not services or products. Why the hell was there never a 20/20 hidden camera report that showed these people sitting around laughing at the fools who were buying shares in their companies? It literally happened every single day for the last 12 months. I'll leave you guys with this- outside of oracle, cisco, intel, microsoft, and ibm, EVERY SINGLE INTERNET STOCK IS A PENNY STOCK WAITING TO HAPPEN. Its not a question of "if" but rather a question of "when." Just because your favorite mo-mo inut stock has fallen by 90% doesnt mean it isnt going to fall another 90% into the pink sheets. Of course, all this knowledge managed to lose me a ton of money shorting too early, and if I hadn't jumped on the mania bandwagon a few times i would have lost my shirt. But now, I've taken up short positions in 5 or 6 core favorites and I sleep at night knowing these scams are eventually going to zero. The days of waking up and having xyz.com up 100% because of a press release are over, forever. The jig is up. The mania is over. A soufflee can only rise once.
BTW- on a pleasant side note, Bay Area real estate prices are plunging faster than a Bre-X executive from a helicopter. Within 12 months i expect the average rental or purchase costs for dwellings to be down 70%. If only there were an easy way to short overvalued real estate.
I mean, for gods sake, did anyone really think that 500 square foot shacks, that would be condemned in a south carolina trailer park, could really continue to sell for a million bucks?
I'll tell you one thing though. Nobody wants to hear that they were wrong. I used to preach to anyone who would listen that this whole thing was going to collapse and decimate the bay economy. Everyone thought I was nuts, even those participating directly in the scam. They thought it would go on forever. They questioned my sanity for talking about shorting tech stocks at parties.
These days, while everyone around me is losing their shirts or having to take out second mortgages or friendly "company loans to the execs" because their company's stock has collapsed and they were foolish enough to buy other mania stocks on margin against their barely vested options, well, I keep my mouth shut. The pain out here is already worse than most people can imagine. People are bankrupt and still in denial. People have been living beyond their means and are stuck with house payments on property that has been chopped in HALF because of the collapse in real estate. I see it all around me. And just like it took months for the public to finally realize this whole thing was a scam, it'll probably take months for the depth of the destruction in dot.com land to make the headlines.
And I don't feel any glee. I tried to convince close friends to stay out of this mania, or to take the money and run, and i've seen lives destroyed. It doesnt matter that I was right and they've finally realized it. I knew I was right all along. I dont feel any more "right" now that even the most rabid bulls finally understand that I was right.
The only disdain I have right now is for people who still, at this point, continue to insist the mania is still alive and that these stocks are going to come back. Clowns like Voltaire and Blodgett and all the CNBC pimps who continue to say "tech is where you've GOT to put your money." These guys are even worse than the crooks who actually ran the companies they tout. These analysts know without a doubt investors are going to lose, and they continue to pimp just so they can unload a little more inventory before the last note of the music is played. They have absolutely no shame.
The sad part is, when the congressional hearings begin, and TRUST ME THEY WILL BEGIN, people are going to be forced to finally accept that they were greedy fools. When a government official finally says "Yes, this was a giant scam" then people will no longer be able to rationalize away their own folly. They'll no longer have the comfort of denial. And once denial is gone, there's not much left. In the end, denial is all there ever really was.
cheers
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If you don't mind me quoting KIS again, I'll say the ONLY profits made in the new economy are made from the sale of stock. You're holding for what ? Did EFAX have a snowball's chance in hell of making a profit ? Or IVIL, or the various idiocies that are promoted in the broker conferences ? I'll also say that there will be a net transfer of wealth from honest working people to dotcom VC's and brokers who know that their schemes will never make a penny of profit. These schemes will go on with or without my or your participation. I think they are designed strictly to enrich their promoters through the sale of stock, and never with business profits. I consider that dishonest. I wish for its early demise. I hope the people who participate in it lose their shirt. There is nothing to admire in Mary Meeker or Henry Blodget. Their mission it seems is to promote a scam. To the extent that a person tries to take advantage of their recommendations, they help the scam continue. I'd rather stay away. |
