"Such as SEEK or YHOO. This industry is changing the mentality of the people. Do not underestimate the power of the masses."
This is why I don't short these stocks. Basically, anyone who buys an Internet stock at current valuations, or indeed any time during the past year or so, is either a gambler (the "greater fool" theory) or an idiot.
"Look at the YHOO CEO tommorow on CNBC. Young, charismatic, successful. When the crowd of young internet traders looks at him, they see the future. And they will drive these stocks to the moon."
I agree with you, and rest my gambler/idiot case.
However, the price of these issues will continue to increase as long as the number of gamblers and idiots continues to increase.
And as Internet access becomes more common and accessible, the number of gamblers and idiots increases. See the positive feedback loop here?
The price of these issues will collapse when the population of gamblers and idiots ceases to grow. This will happen when the desktop computer approaches market saturation in the US and the Internet consequently ceases its geometric growth. I am not ready to bet on when that will be, which is why I don't feel comfortable being short or long these stocks -- but at under $600 including a monitor, the saturation point is higher than most of us ever imagined.
I don't believe, however, that PCs will get much under the $400 dollar mark without omitting some major component. Further, the $400 price depends on harvesting obsolete parts at or just under cost; note that hard drives, for instance, always cost $175-185 unless they are closeouts. So stalls in technical progression will actually cause price rises on the far low end.
Enough rambling,
Steve |
