Don, I respect you opinion, but I believe that with the internets, and some other high-flyers, their success has a lot to do with the nature of the people who participate in the market place. I have not been involved with trading in the US for very long, however, I have noticed that there is a greater disregard for basic fundamentals here than in other equity markets.
The main reasons for the internuts success are numerous. I should add that the only related stock I have occassionally owned is AOL, simply because I am too old a dog to change my tricks.
Firstly, the internets always exceed their 'earnings' estimates and revenue growth. Secondly, because they are so overvalued, they draw in shorts. Thirdly, the successful stocks manage their price by regularly releasing news (on this one, 2 years ago I was consulting for a major bank here in San Fran, working on internet banking and advertising. AOL was chosen as the medium and there were problems which required a senior systems engineer to be on site. I talked about the stock price not doing very much and he told me that management had every intention of dealing with that very quickly - if only I'd listened !). There is a high level of retail investment that fuels the high performing stocks when fund managers decide that valuations are too high. LU is another non-internut example - even though rumours continue to abound about them having to stretch to meet earnings projections.
In short, I regard the the internuts as a microcosm of the market - a self fulfilling prophecy if you like ..... if things get tough, they issue news that makes shorts cover and causes a price spike.
This is crazy, I know .... but then I think the US financial markets are totally unreasonable ...
Good luck all
Stephen |
