I just don't get it. Why would anybody buy an internet stock
We have a little puppy on in our house, which the wife and kids are attempting to train to go poo-poo outside. Although there is some progress being made on this front, we all have to step very carefully around the house. So I am especially sensitive right now not to haphazardly "step in it" and thus, should know better then to attempt an answer to your question. But as a very happy GNET shareholder, let's just consider this my small part in keeping our valuable asset, SI, well, a valuable asset.
Five years ago AOL was broadly condemned, by Barrons and the like, as the most overvalued stock on NASDAQ. For many months it was the most shorted stock on the exchange. Since then it has risen 80 fold.
Fast forward to today we and we see that Internet stocks are broadly condemned in the financial press as the biggest bubble in 350 years. There is as far as I can tell, a near unanimous consensus mirroring your skepticism about the group. Mass fear and skepticism, at a Top? Maybe, but unlikely.
I do not purport to know how to value these puppies with traditional fundamental, or even my first love, technical, methodologies. My approach has been to own a basket of them and just not worry about anything I read or hear in the media. Why?
Maybe because the Internet is developing as the most important invention and advancement of civilization since the Gutenberg bible in 1455. I chose not to let the investment opportunity of a lifetime pass me by because I cannot properly evaluate a stock with no earnings, hardly any sales and no employees over 30. What it does have, is a future and a stock that reflects 100 times more demand then supply.
I initially took 4% of my portfolio (where it that number come from?) and bought a basket of these puppies. I thought at that time that the worse that could happen is that they all go to -0- and I suffered a mild 4% correction in my holdings. The best thing that could happen is that they all go up 200-300-400-500% and I have to worry that they suddenly make up 15% of my holdings. Bingo.
It comes down to this: The naysayers of Internet stocks have never recommended purchase of a single one. From the beginning, they have been simply wrong. What is different now that would suddenly turn these wrong-way Corrigans into seers? That these stocks as a group have gone up 500% in a few years?
You can't just buy any dot-com out there and expect triple digit returns. But you can open your eyes to an opportunity in the sector and make an intelligent choice to participate, or not. Isn't that what Against the Gods and risk versus reward is all about?
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