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Microcap & Penny Stocks : Rat dog micro-cap picks... -- Ignore unavailable to you. Want to Upgrade?

To: KonKilo who wrote (7699)	4/9/2002 5:21:58 PM
From: Bucky Katt	Respond to of 48461

Interesting history lesson> From CBS-MarketWatch> Go-go '90s We shouldn't forget that we just lived through the go-go '90s. The probability of having all the right forces coalesce to create the big-bang bubble is about as low as Pets.com coming back from the dead. (Thank goodness.) So, for those who are considering going through the rubble, here are 10 reasons why the search for stars in this teenage wasteland could be in vain. After the bubble experience, there are fewer fools. Fewer fools means it will be harder to generate rising stock prices that aren't backed by fundamental reasons, according to Mike Shor, a professor of economics at Owen Graduate School of Management at Vanderbilt University. If the Internet years (1995 to 2000) are similar to the 1980-1984 PC revolution, it's more likely that companies going public after the 2000 crash will be big winners by the end of 2010. Of the 50 largest market capitalized tech IPOs in the last 22 years, 20 went public between 1985 and 1989. Only 9 went public in the early part of that decade, including Compaq Computer (CPQ: news, chart, profile). Newer companies (that aren't public or just recently went public) are better positioned to survive as they're focused on the latest technology and not encumbered with legacy products. They're also better capitalized. (Security software company NetScreen Technologies (NSCN: news, chart, profile), which went public in December 2001, has a $1 billion market cap. It's gaining market share from leader Check Point, according to analysts.) Five percent of tech IPOs born in the past 20 years created 100 percent of the net wealth created, according to Morgan Stanley. That means if you invested in the other 95 percent, it would have been a zero-sum game. Assuming a few home runs produce outsized returns, what kind of returns do we need? Assuming one invested in the whole group, the five percent of the winners would have to deliver a 20-fold return to make up the loss for the other 95 percent. Those returns don't come easy. It took Microsoft (MSFT: news, chart, profile), the best performing tech IPO in the past two decades, more than five years to deliver a 20-fold return from its offering in March 1986. It went public at 15 cents in March 1986 and hit $3 by March 1991. It took AOL(AOL: news, chart, profile), the second best performing tech IPO, three years to deliver a 20-fold return from its IPO. Odds of success are low with this basket approach. "Not only are we assuming that the basket of stocks includes a Microsoft or an AOL, one has to wait three to five years for that type of return," said Prof. Shor, adding: "And we were in a bull market." In other words: what happens if we're in a bear market? Bear-market risk. According to David Tice, who manages the Prudent Bear Fund, the stellar performance by the Dow over the past 104 years was due to three "super bull" markets. The last bull market period lasted between 1982 through 1999. The periods in between were painfully long and far from lucrative. If you invested $1,000 at the peak of 1929, it would have taken 24 years to recoup that value. If you invested $1,000 in 1966, it would have taken 27 years to recoup that value. Seventy-six percent of venture funding invested over the past 27 years occurred in 1999 and 2001, according to a Morgan Stanley report. This suggests that many companies that were funded shouldn't have been. Invariably they drain our mental energy. Consumer staple stocks, like Anheuser-Busch, might be a better place to park money for now. See prior column: Bud's growing faster than tech. Acquisitions aren't always a great exit strategy. Remember when Yahoo (YHOO: news, chart, profile)bought Broadcast.com? If you bought 10 shares of Broadcast.com at a split-adjusted price of $9, you would have spent $90. When Yahoo purchased Broadcast.com shares at 0.71 Yahoo shares for every Broadcast share, you would have received about $525 in the form of seven Yahoo shares. Those seven shares would now be worth about $130. Full story>http://cbs.marketwatch.com/news/story.asp?guid=%7B4CD345F7%2DD40B%2D48D6%2DA8CE%2DE74054E273DA%7D&siteid=mktw