To: PCKL who wrote (3093 ) 6/15/1999 4:05:00 PM From: michael r potter Respond to
Without getting into a discussion about the broad market, here are the reasons I think over $100 on SFE is unlikely. [Would gladly accept being wrong on this one]. About two months ago, the gap between "value" and "growth" had gotten to historic extremes. Since then, there has been much turmoil as the market has been closing that gap by pushing many value stocks higher and pushing many high PE and no PE [internet] lower. The gap has narrowed considerably with internet stocks down almost 50% and very high PE stocks down a lesser amount. The gap is still historically wide, and IMO is not likely to widen again for the balance of the year. More specifically, the internet stocks, which SFE mostly is now, has crushed many of the buyers who got in late-especially on margin in Feb., March, and April. The last big sector mania bubble to burst was biotech in the early 90s. The majority of todays internet buyers [individuals] were not around then and this is the first real bust they have seen. Many of those accounts are financially impaired and certainly they and many un-experienced mutual fund managers have been psychologically chastened. An experience like this of 50% declines [more on margin] is a behavior altering experience. Since the internets don't have traditional "value" criteria, they will continue to trade as a function of the psychology toward them. I just don't see todays investor whether individual or fund manager as having the mind set that will allow them to push internets in general [and SFE as part of the group] to levels that were achieved during the mania period ending in April. Technically, unlike on the way up, now there is a lot of overhead resistance as millions of shares have been bought at much higher prices and a fair number feel trapped and are more inclined to bail out at breakeven on the way up. It will all be clear in 6 mo.! PS. Was todays buy in conflict with yesterdays post "to risky to buy or sell short" "at least need to build a base" Yes, to a certain extent, but yesterdays statement was more intended to I-nets in general. SFE while trading with them has a solid NAV somewhat limiting downside. 2. Am very comfortable with SFEs mgmnt. and long term future [rationalization?] 3. Do not consider todays buy low risk, was a case of bottom picking and could very well be premature-yesterdays message of a base building period from whatever the ultimate bottom is-is still likely. Thanks, Mike
