Here's the latest from Steve "I'm a Loser" Harmon. The little coward didn't have the guts to post his YTD return in this Email. This is just the intro to a rather long-winded pity party:
10 FOR 2000 UPDATE: SEPTEMBER
by STEVE HARMON
Founder and Chairman
Zero Gravity Internet Group, Inc.
Since these 10 stocks were selected in December 1999 when -
in hindsight - the Internet stock market was nearing its
recent top, we believe that the mantra of 'buy high, sell
low' may not be the best approach. But keep in mind that
this subscription is an information service and has never
been individual advice. Your investment decisions are up to
you. When to buy or sell or hold or simply read. These are
the moods of the market speaking more than anything. Profits
matter but we still see sector shifts driving movement more
than pure price-to-earnings.
The risk side of technology stocks are always one click
away.
First of all I believe that we are in a much different
market today than December, with the trend that investors
have shifted their attention to infrastructure and
hardware/chips. A tack that has worked to view the market is
in three segments: infrastructure, applications and
services. So you take the scars of the April correction,
dust yourself off and look for long-term approaches rather
than short-term pops and drops.
Were you or I the only ones hit by the April rain on the
tech parade? Certainly not.
Some of the biggest names in investing were whipsawed by
technology this year, including many of the multi-billion
dollar hedge funds.........the so-called "smart money."
We have our share of scars also with the 10, it's part of
the risk. It's what you do with the scars that matters.
Looking ahead, with these stocks consolidation may end up
taking some of them into new directions, with early signs
now approaching that that's the case. That's the catalyst
for value if the right merger partners show up, pay up and
buckle up for the ride.
The Internet sector in general lives up to its volatile
nature, this time risk is the highlighted word. In December
it was in hindsight much too frothy a market with literally
almost all Internet stocks hitting all-time highs.
Gone are the anything.com easy IPOs and global euphoria over
everything Internet. On the streets of Hong Kong when I was
there in March it was mayhem with speculators lining up by
the thousands to buy anything Internet related.
We're still living with the post-correction after effects
and it's good for the market.
Average investors no longer want venture risk. Look at the
incubators, all trading well off their highs. Incubators are
proxies for the market's appetite for IPOs and concepts.
One recent incubator IPO could barely get out the door,
divine Interventures (DVIN), after its first underwriter
dropped it and the offering was reduced dramatically with a
second underwriter. A closed-end fund, MeVC Fund (NYSE:MVC),
has traded below net-asset value since its debut, further
showing how average investors at the moment want less risk
and instead demand harder assets, liquidity and revenue,
path to profits.
When the market is in this funk, as we said in our last
report, infrastructure or underlying assets gets more
attention. Hard assets, less risk, the pendulum swung back.
The best approach to me is a comprehensive market outlook in
three layers: infrastructure, applications and services.
Forget market timing.
The drop from April to current levels highlights the fact
that market timing is extremely difficult, especially a
market driven by moods and sentiment, risk and momentum
traders. Dominant companies trade at premiums while those
that are not get ignored in the current climate.
Investors, us included, are in a rebuilding mode, re-
examining the businesses, opportunities, management teams,
shifts, and trends. Many are still on the sidelines.
Infrastructure and optical networking have become the latest
"hot" areas,
highlighting the trend to chase the latest trends.
Let's discuss the 10 and see what they are doing that's
right and wrong:
As of August 31 these are the latest share prices:
USIT : $7.81
AOL: 58.94
CNET: $33.50
RBAK: 149.38
NETP: $14.19
ETRRA: $40.13
PCNTF: $14.63
CMGI: $44.75
SPYG*: $44.19
SCOC: $4.63
*SPYG ACQUIRED BY OPENTV |
