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Technology Stocks : Garbage Internet Stocks: Short the hype!
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To: wiley murray who wrote (3)12/10/1998 1:22:00 PM
From: Robert Marsh  Read Replies (1) of 29
 
I too am looking for this internut top. Here's my two cents;

Price is basically determined by supply and demand. Supply of internet stocks is increasing as evidenced by the numerous ipo's this week and companies buying into internut companies or converting distribution channels to the web. Supply is also increasing from the insider selling going on in the sector. I'm willing to bet supply will jump about early January when capital gains can be deferred to '99.

Demand is increasing as more people use and buy on the net, a trend that's sure to continue. Demand will drop when a significant number of traders lose money, probably when one of the widely held stocks misses earnings.

So for the when question, I would look to mid January when earnings are released.

Now the big question . . .how to play the fall. Puts are priced ridiculously, almost requiring a 50% correction in the stock within a short period of time just to break even. Most brokers won't let you sell uncovered calls, but there's money to be made there. Shares in many issues are not available to short. When you can get them, you better be a day trader because the price volatility can kill you. The two so-called internet sector indexes I know about, IIX on AMX and INX on CBOE, include components like Cisco, which I don't want to short.

Keep up the ideas on shorts,

Bubba
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