Can you say "tulips"? Once the internet stocks come back to earth, and they will, everyone gets hammered.
Comparing internets to tulips is not valid. Internet e-commerce stocks are one market segment. It could be argued that when these stocks fall, the rush to quality will sustain the blue chips, including tech companies that have earnings, such as MSFT, CSCO, etc.
As a parallel, compare to the Japanese market back in the 80s. They hit a frothy 80 PE for the market which was double their typical PE. When the real estate market went bust, so did the entire economy from which they still have not been able to recover. There real estate market and our internet stocks are one and the same. When our internet stocks go bust, what will be the net effect of our economy?
That is NOT a parallel. Comparing the real estate of Japan to our internet stocks is ridiculous! When the real estate market crumbles, every aspect of an economy is directly affected. When the internet stock segment crumbles it affects a major portion of a small segment of our economy. I have heard, for example, some convincing claims that the internet stock craze is being driven by individual investors, not the institutions. The institutions will survive an internet e-commerce stock fall nicely. |
