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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (79325)	4/11/2000 2:18:00 PM
From: Les H	Respond to of 132070

April 6, 2000: Big Mistake. I bought for Millennium today more YHOO and SNDK on weakness. Both stocks are growing revenues at a blistering pace, with Yahoo! at nearly 100% for 1999, and Sandisk at over 80%. During Q1 this year Yahoo! increased page views by a huge amount over expectations, which will eventually be monetized if management does its job, and that is really a better number to use for Yahoo! than reveune or earnings growth. It's kind of like laying railroad track in the early 1800s. As long as the industry was capacity-constrained, the amount of new track laid was a better measure of growth than revenues or earnings, because they lagged infrastructure and capacity additions. I also decided to capture some big losses to offset future gains, by selling for Millennium our INSP, SVNX, ITRU and AETH. I never know for certain when I'll have the opportunity, so I tend to take the losses when I can. Since this kind of steep correction has been happening about every 9 - 10 months since the Internet Age began in Dec. of 1994, I may not have another opportunity before the end of our fiscal year. This kind of planning has been responsible for our ability in the past to minimize or eliminate big capital gains payouts, despite our high returns. Big mistake! Friday they were all up huge. In the past I always had time to buy them back after 31 days without a huge runup, but not this time. At least not so far. They could still decline again, but maybe not, too. This illustrates what I said yesterday. You can ride the tiger, but you had better not let go. I made the mistake of letting go. All four stocks are still down in the neighborhood of 50% from their highs, but the magnitude of their daily moves can be enormous. A big part of the reason is the tiny number of shares in the float (number of shares actually available for trading on the open market). Even a small supply/demand imbalance in stocks like these can have a huge effect on the stock price. Infospace has a relatively large number of shares in the float - 110 million - for an Internet stock, but the rest all have much less. AETH only has 7m, ITRU has 13m, and SVNX has 6m. This also may be a clue that the surge of money back into the stock market is focusing disproportionately on the Internet stocks, which all these are. Some analysts have been saying we should be cautious, and stick to the tech equipment makers, which tend to be less volatile. I bought into that argument also, since it seemed to make sense, given the level of uncertainties at the moment, which is higher than normal. This may be an indication that the professionals (me included) are underestimating this market, and that revenues in the purely Internet companies are still accelerating. At any rate, I am re-evaluating my expectations for this market, and they were already high. It's not time to up them yet. We may still see a retest of our lows as many expect, but frankly I'm a little rattled by the ferociousness of the turnaround in most of the pure 'Net stocks from their bottoms. We may have too much in hardware stocks. I'll have to be particularly alert over the next few weeks to signals that I've been off on my relative allocations between hardware and software/connectivity companies. This also points to the importance of being intellectually flexible in a new kind of market (and world) most of us still don't fully comprehend. Surf on, dude! ipsfunds.com