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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (25660)	3/19/2000 11:13:00 PM
From: Johnny Canuck	Read Replies (2) \| Respond to of 68529

Excerpts from the Sunday NY Times: A Nasdaq Correction; Now Back to Business By KENNETH N. GILPIN "Q. Are investors taking on too much risk? A. The brokerage community used to look at the general public as ignorant -- not understanding companies, valuations, how the market works. But with the Internet and the tremendous interest in stock investing, the public has become more educated and has a stomach that can absorb more risk than they ever have before." "Q. What does the biotech blowup tell us? A. It reflects high valuations. Biotech has been one of the best performers. When you have the threat of government intervention, certainly they're vulnerable. Am I surprised by the magnitude of the drop? No. There's a lot more talk about huge drops than the huge gains. These things have had unbelievable moves; 12 biotech stocks represent the entire gain in Russell 2000 this year." ************************************ ************************************ If You Think Last Week Was Wild ... By GRETCHEN MORGENSON "Which makes it well worth noting that over the next two months, the supply-demand equation in these shares will change significantly. That not only could depress the highfliers, but it could dampen the performance of the Nasdaq over all. According to Steven Galbraith, research analyst at Sanford C. Bernstein & Co., the increased supply in new-company shares will come from the inside. Top executives at companies going public usually agree to abstain from selling their shares into the open market for a period of time after the offering date. These agreements are known as lock-up periods. Many lock-up periods are about to expire, unleashing what could be a flood of shares onto the market. By Galbraith's reckoning, over the next three months some 2.4 billion shares of stock in last year's new issues -- more than twice the current number of shares trading in these companies -- will be free to enter the market. Because these companies have seen huge price increases since they came public, it is a good guess that many executives will be eager to sell what they can of their holdings. How big are the gains that the insiders are sitting on? While the initial value of these offerings was $52 billion, their worth, as of last week, had rocketed to $256 billion. Only one in four of these companies makes money, Galbraith noted. "It truly is the physical supply-demand dynamic of the piece of paper that is determining the near-term valuation of these securities, not the intrinsic value," he said. " "Given that about three-quarters of early venture investments typically fail, Galbraith suspects that within a year or so, many of these stocks will have hit the skids. " "Unfortunately, that unwinding will hurt individual investors much more than institutions. While institutions are the initial owners of these shares -- 90 percent of IPOs are allocated to favored mutual funds and other large investors -- individuals typically own them in the months after their debuts. Galbraith found that nine months after an offering, institutional ownership amounted to around 10 percent. "