For a real comprehensive overview of the market and investing in general I highly recommend bookmarking Kerm's Korner.Here is a small portion which may be of interest to this thread:
To: +Kerm Yerman (14866 )
From: +Kerm Yerman
Sunday, Jan 17 1999 8:51AM ET
Reply # of 14868
KORNER REPORT / Investing & Market Kommentary - 3
New York
Investing
Throw Out The Rulebook
No investment rule book, no history lesson could possibly prepare investors for today's
markets. This week, as President Clinton's impeachment trial began and Brazil's currency
collapsed, the Dow dove. But then, like some Hollywood hero, it recovered. Somehow,
against a backdrop of tremendous turmoil, optimism prevails. Record consumer
confidence, tiny inflation, insignificant unemployment, low interest rates, strong profits.
Gravity defied, yet again.
Value Lie Manager Alan Hoffman's view seemed to sum up the late-week mood: “We're
probably setting up a pretty good base for rational expansion in 1999,” he told CNBC.
Indeed, the Dow shot up more than 220 points on Friday after falling more than 500 points
in the first four days of the week.
Regarding Brazil, a sense of been-there-done-that has taken hold, at least for the moment.
No matter how dire the economic situation appears — with its implications for the rest of
South America and the developing world — investors remain determined to take solace in
stock market resiliency. Notably, Brazil's stock market soared an unheard-of 33 percent
on Friday.
Art Cashin, director of floor operations for PaineWebber at the New York Stock
Exchange, noted this week on CNBC that investors see the Brazilian situation as nothing
more than a rerun of last summer's Asian/Russian currency crisis — an event that sent
U.S. shares plummeting at first, only to return to new highs. He sums up the common
view this way: “Wait a minute, I've seen this movie before, back in August. Nobody dies
at the end. I think I'll buy everything.”
The Internet — Just a Craze or History in the Making
Once upon a time, railroads were the “next big thing.” Will the Internet prove as
profitable?
“Every invention doesn't create the same ripples in the economy,” write Michael Cox and
Richard Alm in their new book Myths of Rich and Poor: Why We're Better Off Than We
Think.
While the parachute was useful, for instance, it wasn't an earth-shattering invention. The
Internet, on the other hand, just may be.
Why? What makes the Internet an invention for the ages — and not just the latest fad?
Internet's Rapid Entry
For one thing, people have adopted the Internet faster than most any other
information-age invention.
The first mass-produced automobiles chugged down American roads in the early 1900s,
but it took 55 years for even a quarter of U.S. households to buy an auto. The personal
computer fared better; within 16 years of its introduction, a quarter of U.S. households
owned one. Adoption time for the cellular telephone, introduced in 1984, shrank to 13
years.
In 1991, the World Wide Web made the Internet accessible to anyone with a computer
and a browser, and in less than ten years the 'Net has reached 25% of the population,
says Cox, also a senior economist with the Dallas Federal Reserve Bank.
Creating New Industry
For another, the Internet has spawned another industry: E-commerce. The Internet is
changing the way people spend their money, says William Sterling, global strategist for
Credit Suisse Asset Management and the co-author of Boomernomics.
According to Jupiter Communications, nearly 10 million American households will have
high-speed Internet connections by the year 2001, and coupled with advances in payments
and securities technologies, “will in all likelihood put on-line commerce into hyperdrive.”
The value of electronic commerce is expected to reach a staggering $223 billion over the
next four years, up from just over $11 billion in 1997, he adds.
Still, the Internet interest has the smell of a “mania,” says Joseph Aaron, a San
Francisco-based investor in technology hedge funds. The behavior of investors bears a
suspicious resemblance to those who bought into the Dutch tulip bulb craze in the 1700s,
when speculators — and later, the man on the street — paid enormous sums for rare
bulbs, then lost fortunes when the flower bulbs went out of style and bottom fell out of the
market.
21st Century Radio?
On Wall Street, many have compared Internet stocks of today to radio stocks circa 1929.
Not only did the stock market rocket to new highs before crashing that year, but radio, the
newest craze, and broadcast industry-related stocks, started a slow decline that ended
with the death of empires such as RCA.
Internet stocks are similarly volatile. TheStreet.com Internet Sector index lost 35.73, or
6.6 percent, to 506.34, in a single day this week. And 'Net stocks themselves yo-yo
seemingly uncontrollably. For example, Yahoo! tumbled as low as 332, then rebounded as
high as 406 before closing off 8 percent at $368 a share in one recent trading session.
So do Internet stocks — and the frenzy surrounding them — signal a peak in the 'Netizen
craze and a future downfall for the industry? Assuming the Internet joins the lexicon of
American inventions, and isn't just a fad, some think most of the money may have already
been made.
“Investors [in Internet stocks] are not out there buying Amazon.com because they can
make a case for sound fundamentals of the companies, most of which are losing money. It
could end badly at some point,” says Aaron.
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