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Technology Stocks : CMGI What is the latest news on this stock?
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To: bargainman who wrote (7293)4/19/1999 5:50:00 PM
From: FR1  Read Replies (5) of 19700
 
If it helps any at all –

I keep a list of the nets and what is happening this earnings period is almost the same as last time (in January). In fact it started on the same day and everything.

Basically there is a large run up in stock prices just before earnings.

You look at the first week where a lot of net earning reports are due. That Monday is the last big up day. Then the sell off begins.

In January it had two parts. A Killer sell off for 2 days followed by relief for a day or two and then another 2 days of big sell offs and then the worst was over. If you look at this last week we have experienced pretty much the same thing.

After the damage, the net stocks did not shoot straight back up. They worked their way back up. By the middle of the next month we were screaming again.

IMHO it goes like this:
Most money is handled by MMs (Money Managers like large brokers, fidelity, etc.). They handle portfolios in the billions. Their “duty”, they feel, is to keep the value of stocks realistic. It is accepted practice that the time they square things off is earnings month. They sell down the guys not worth their price and buy the “solid players” showing good profit/growth and future.

MMs realize that net stocks can never give a earnings report that will justify the stock appreciation they have acquired before earnings time - no matter what the nets report. Therefore, they sell off real big as soon as earnings are about to start (no need to wait). They want to chop the price of the stock down by 35 – 50% off the high. Then they slowly start buying back.

It happened in January just like it is happening now and it kind of makes sense. For what it is worth, if this time follows January, we have just about had the last big whack. Possibly one more day but today was so strong we might be done. Good nets will come back and bad nets won't.

Then again, maybe it looks darkest just before it goes totally black ;)
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