Yes, It is possible (probably) the i-net hype will start again for some reason. At least there have been no new stock-splits (like the YHOO longs are hoping for) announced.
Don, I think it is likely that the stocks of the big players in the internet sector (AMZN, YHOO, XCIT, LCOS, AOL, etc.) have now seen their tops for this market cycle. Once stocks turn and start coming down hard, the longs will sell the rallies at every chance -- some to try to break even, others grasping at a chance to seize the profit they let slide on the big run up. The only thing that will turn these guys around now is if the hype comes true (i.e. they can in fact make money). However, I think that is unlikely near term. Here is a recent comment that explains why:
Equally skeptical is David Simons, managing director of Digital Video Investments, an institutional research firm. "There's going to be a blindside here," he says. "Only because there's absolutely no consideration of risk....All you here is the potential is limitless. To which I say, the pitfalls are bottomless."
As a sign of how shaky the underlying business of the Internet is, Simons estimates that more than a third of all advertising on the Internet is supported by companies whose basic business can't support those ad expenditures. Instead, he says, they're being funded by money raised from venture capitalists, initial public offerings of stock and secondary offerings. When this ready capital runs out, he says, it could have a seismic effect on businesses such as Yahoo! and America Online (AOL:NYSE), which are banking on advertising income for future growth. They'll likely have to renegotiate multi-year advertising deals, Simons says. "It's almost going to be the Internet equivalent of the bad banking loans of the early 1990s," Simons says. "But unfortunately, there's no Federal Internet Advertising Insurance Corporation."
thestreet.com.
Think about all the new deals touted by XCIT, AOL, YHOO, etc. Are the links between established big advertisers or just hot money (largely new internet) companies... clearly, it is the latter.
Kip |
