Glenn, I got the following article from our friend Blankmind:
interesting view on hot sector stocks without profits:
[OTC Growth Stock Watch (617) 444-6100]
During the last month, there has been extreme speculation
regarding
internet/high-tech stocks and, most recently, cancer treatment
stocks. When
such speculation in a particular segment of the market occurs, it
usually
means one of two things.
First, that the industry segment where stock prices are being
pushed up
should be doing much better fundamentally 6-months down the
road. Or
second, if the industry segment has no history of profits, such as
the
internet and cancer stocks, then these sectors should drop quite
dramatically if they do not perform fundamentally within a
6-month period.
Overall, what these market segments are telling us is that anything
relative to the internet or the treatment of cancer should be the
future
and, if you don't hop on board the locomotive now, you may miss
the ride.
It has been my experience, however, that once these types of
companies
actually begin to earn money, they will begin to sell at real P/E
values.
When that happens, all these stocks will gradually tumble down
and become
under-performers in the market. You can only live so long on hype
and what
the future may bring.
Eventually, these companies will have to become real and show
profits.
Bottom line is, even if these internet stocks start making money,
the stock
prices will be settling back into reality.
As I mentioned last month, I really don't even know what a
correction is
anymore. However, the one we are experiencing should be swift
and probably
only about 5% and 8% (at the most) off the recent highs for the
Dow and the
NASDAQ Composite, respectively. With the Dow's recent
closing high of 9184
and current trading level, we are approximately half way there.
The NASDAQ Composite is also half way there with a recent
closing high of
1917. We must also keep in mind that this mild correction might
temporarily
rebound, especially given the positive nature of the market on
4/30.
I have read it! Reply |
