An interest hike of any kind would be sobering for all stocks, not just CMGI.
IMO, on a half-point hike, first tier internet stocks would drop 8 - 15% on the news. But that's a day for CMGI anyways, isn't it? Second tier internet stocks woul drop 15 - 25% while investors sold their positions and then digested the news. Third tier internet stocks could see a decline of 25 - 50% while investors evaluated whether putting their after tax capital at work in stocks with no profit, no positive cash flow, and currently trading at a multiple in excess of 50 times sales was really worth the risk.
It's not the first rate hike that everyone will be reacting to. It's the reasonable expectation that subsequent hikes may follow and it may be time, if only for awhile, to move to cash.
To be sure, this correction will occur at some future date, but it won't be sudden, totally unexpected, and IMO, we'll have plenty of warning to pay up for puts or take money off the table. The only people who get hurt will be the ones that think they're smarter than the market.
BTW, this scenario still doesn't affect my view of CMGI, but I know others may not share that opinion.
Best regards,
Mark A. Peterson |
