Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Apollo who wrote (3773)	7/15/1999 11:21:00 AM
From: MulhollandDrive	Respond to of 54805

Stan, Interesting article I lifted from the EXDS thread on E-commerce from IBD: Internet Stocks Just Beginning A Long Ascent<IBD> Date: 7/15/99 Author: Doug Tsuruoka Alberto Vilar says technology comes in big waves. As chief of the Amerindo Technology Fund, a $100 million fund that invests in about 20 technology stocks, Vilar has one of the best spots on the beach to see what's coming. Through July 9, his fund was up 120% for the year. That makes it the No. 1 performing mutual fund this year, says mutual fund tracker Morningstar Inc. Vilar's surf report: The Internet has started the third great computing wave. The first was kicked off in the 1960s by host-based computing powered by mainframes. Client-server technology, pushed ahead by Microsoft Corp.'s Windows operating software, touched off the second wave. Now Vilar sees the Internet stirring the biggest wave yet. Those who think Internet stocks are sizzling already haven't seen anything yet, he says. He predicts Internet stock holdings will rise to $2 trillion to $3 trillion over the next 10 to 15 years - or sooner. This compares with about $300 billion in market capitalization for all Internet companies today. Yahoo Inc. and America Online Inc. make up about half of that $300 billion. Vilar recently spoke with Investor's Business Daily about all the money to be made in Net stocks. IBD: How do you know the Net will generate $2 trillion to $3 trillion in stock holdings? Vilar: That's a fair question. In the 40 years of electronic history, we've had two major cycles. The first one lasted 25 years and that was the mainframe. The second was the client-server generation. That lasted from about 1984 to 1996 . . . about 12 years. The second also is the dominant form of computing today, and has generated about $1 trillion in market wealth. The first two generations were about computing, while the third, which we'll call the Internet generation, is really about three platforms: computing, telecommunications and electronic commerce. So, if the second wave generated $1 trillion in 12 years with one platform, then the three platforms in the third should generate a much larger number. So, for starters, we're saying $2 trillion to $3 trillion. And that may not take 10 to 12 years; it may be in six or seven years. IBD: How big a role will e-commerce play? Vilar: We've been saying for some time that you could see $1 trillion to $2 trillion in electronic commerce (transactions) in the next several years. IBD: What are the top trends you see in technology over the next 10 years? Vilar: There are two dominant trends in the global economy. One is technology that is mostly the Internet. You are moving toward the new Internet economy where you are digitizing GDP. The other one is the globalization of commerce. This is a generational transformation in the global economy. Generational means every 60 to 70 years. IBD: What exactly do you see happening in the third computing wave? Vilar: First, you're likely to see 300 million to 500 million people on the Net. Second, the Net is basically a productivity tool for businesses, and 80% of the Net is likely to be business to business. That's why you could see $1 trillion to $2 trillion in electronic commerce (transactions). Those two parameters are the real drivers here: the 300 million to 500 million people and the explosion in electronic commerce. Once you have those 300 million to 500 million people on the Net, you could have up to 1 billion computers that are interconnected. IBD: How do you view Internet stocks in these volatile times? Vilar: We expected a bull market correction this year in the (tech) sector after two phenomenal quarters in the fourth quarter of last year and the first quarter of this year. In April and mid-June, you did have a sizable correction. Corrections in bull markets in technology stocks run 30% to 50%, and a lot of those stocks had 30% to 50% corrections. Short term, there was some recovery toward the end of June. It wouldn't surprise us to see more (declines) through September. Not a lot. I think in the fourth quarter, the stocks will get revved up very smartly. So most of the correction is behind us. Over the next two months or so, the smart investor should be looking to accumulate Internet stocks on down days. (C) Copyright 1999 Investors Business Daily, Inc