Roger's 1998 Short Picks Message Board

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Strategies & Market Trends : Roger's 1998 Short Picks

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To: Roger A. Babb who wrote (15297)	11/11/1998 4:26:00 AM
From: Bill Wexler	Read Replies (1) of 18691

Oh..one more thought Roger... If you want the true contrarian play on the internet stock bubble, it wouldn't be shorting the internets on valuation - it would be buying the brick & mortar retailers on valuation. This is part of the reason I've been jumping up and down about stocks like COST and CPU. It may not mean quick bucks like shorting one of these internet rockets if you catch the top - but I think in the long run you can make much more money. Much of the current internet hoopla is based on predictions for a strong Christmas (lots of e-commerce). In the meantime brick & mortar retailers of "internet-style" goods (books, software, computers, CDs) have been taken out and shot. The premise is that a brick and mortar retailer is yesterday's news and will never be able to compete effectively with internet companies. As a result, retailers like BKS and CPU produce billions in annual sales yet have PSRs of less than 1, while companies like AMZN sport billions in market cap and PSRs in the double and triple digits. Call me delusional, but I'm betting that BKS, CPU, etc. will be around for a long time. I'll also wager that they'll surprise to the upside with continuing growth in their stores and e-commerce. The internet is growing the economic pie...not shifting it. I don't believe for a second that people are going to stop going out to shop in the same way that I didn't beleive that the high growth in telecommuting and home-businesses would reduce traffic congestion and the number of automobiles on the road (in fact, the opposite was true).

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