interactive.wsj.com
November 13, 2000
In Internet Chat Rooms,
Mood Becomes Gloomy
By AARON ELSTEIN
WSJ.COM
Two weeks ago, an anonymous investor posted a new topic for discussion
on the Internet: "The Coming Financial Collapse of 2001."
Monday, it was the most popular stock topic
on the Web site Silicon Investor, with more
than 600 responses so far.
Not far behind is an Online dialogue about
one of Nasdaq's heaviest hitters, Cisco Systems. But unlike earlier this year,
when chat rooms celebrated the frequent new highs Cisco's stock was
hitting, Cisco now is down 39% from its 52 week peak, and this new
discussion was called, "CSCO -- where's the bottom?" The person who
started it made clear that this discussion is for investors who "don't deny that
we are in a bear market."
Not long ago, as the Nasdaq Composite Index shot first through 3000, then
4000 and finally through 5000 in a matter of months, the chatter in the chat
rooms was positively euphoric. But now, with the Nasdaq breaking through
3000 in the opposite direction, the mood has turned decidedly gloomy.
Many individual investors are battered and scared as the once unstoppable
Nasdaq composite has dropped 41% from its high in March. Thus, the
change in tone on Silicon Investor and other Internet message boards, which
for years were places where naysayers were only grudgingly tolerated and
certainly outnumbered. The weakness in the stock market since early
October has gotten only worse amid uncertainty over who will be the next
president and profit shortfalls from some of the market's most dependable
blue chips.
"I'm beyond disgusted" with the market,
confesses Brent Kirk, drainage district
superintendent who lives in Everett, Wash. And
for good reason: He says his portfolio has
plummeted from a high of $700,000 at the end
of February to about $70,000 today. He plans to cash in about half of his
portfolio and use the proceeds toward a down payment on a house. "Land
values in the Seattle area are apt to appreciate more ... than a dot com
company in the near term," Mr. Kirk adds.
Many of the online postings echo Mr. Kirk's sentiments. "Anyone who thinks
we are NOT in a bear market for the past six months had better have rich
parents," wrote Derek DeVries, an online investor in Venice, Calif. In a
telephone interview, Mr. DeVries, who still owns shares but has been on the
sidelines since the summer, says he is waiting for the Nasdaq to drop to
2500. That would mean a 50% drop from its peak, and an additional 16%
decline from Monday's 4 p.m. close of 2966.72 before he returns to the
market.
"I know we have a bear on our hands," wrote another poster on Silicon
Investor. "When I look at the macros, they look terrible. Euro sinking, oil
high, no president, Middle East trauma, Fed overdoing it with rate hikes,
corporate profits slowing, corporate credit crunch, liquidity drying up, and
markets tanking to ridiculously low levels. You don't have to tell me we are
in a bear market."
Market Vane, a Pasadena, Calif., firm that gauges investor sentiment, says
investors have been growing steadily more pessimistic since January.
Richard Ishida, the firm's president, says his market sentiment index hit a
low for the year in late October. Though it has since bounced back
somewhat, the overall trend is still bearish and he isn't recommending
investors resume buying stocks.
"We're still seeing a bearish trend of market gauges hitting lower lows and
reaching lower highs than before," Mr. Ishida says. "To me, that's a sign to
get in the market later, maybe next week or next month. But not now."
Online trading volume, after surging for several years, also has declined from
its peaks earlier this year. Ameritrade Holding, the Omaha, Neb., discount
online broker, reported last week that average trading volume in October
was 115,000 trades a day.
While that is more than double the 57,000 in October 1999, the volume is
down sharply from 173,000 average daily trades in March.
The combination of uncertainty about the election and corporate earnings
has helped drive some online investors to the sidelines, says Greg Smith, an
online brokerage analyst at Chase H&Q. "When there's bad news in the
market, they simply don't participate."
Even so, not all online traders are throwing in the towel. Paul Singh, an
investor from Mississauga, Ontario, acknowledges he has taken big losses in
such semiconductor stocks as PMC Sierra and Applied Materials. "It's
definitely a more bearish atmosphere and you can see the bulls getting
disheartened," he says. But his portfolio is up 5% for the year, he says. "I
still love the market. I figure when I sell that things are bound to turn around,
because I assume I'm the last one out."
-- Ruth Simon contributed to this article.
Write to Aaron Elstein at aaron.elstein@wsj.com
KJC |
