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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Jan Crawley who wrote (29642)	12/11/1998 12:40:00 PM
From: Raymund W	Respond to of 164684

Fund managers' dirty little secret By Jeff Clabaugh, CBS MarketWatch Market Snapshot Last Update: 11:40 AM ET Dec 11, 1998 Mutual-fund managers are wrestling with a sticky issue: Internet stocks. Specifically, whether to have them in their portfolios. Check out John Tompkins' "Portfolio" column at at the Money Talks Web site. He quotes T. Rowe Price New Horizons Fund (PRNHX) manager John H. LaPorte as saying we'll all look back on the activity in this narrow group of stocks in a couple of years and shake our heads. But Tompkins says many fund managers are stuck with this dilemma: If Internet stocks do well and they don't own them, they're damned; if they do badly and they do own them, they're damned as well. How are fund managers dealing with the conflict? They're buying Internet stocks. And, says Tompkins, they don't talk about them. LaPorte says Internet stocks are clearly speculative. But his fund holds stakes in Preview Travel (PTVL) and Cyberian Outpost (COOL). Tompkins says a computer search turned up plenty of diversified growth funds that have benefited handsomely from owning Internet stocks. But the fund managers who are quietly buying them aren't even always sure why. Tompkins says he asked one fund manager how you know when a Net stock is overvalued. The response? "Don't ask me!" And to drive home the point that buying into Internet stocks is a risky venture, consider this: Morgan Stanley Dean Witter's Mary Meeker says short sellers are driving Internet stock volatility. At the end of October, CNET (CNWK) had short positions of 47 percent, and Amazon.com (AMZN) was 42 percent short. Tompkins says the Internet phenomenon is like no other before it. "Fantasyland" multiples so outrageous that even fund managers who believe in the Internet's potential laugh, writes Tompkins, to cover up their chagrin at owning stocks their peers ridicule. Morningstar analyst David Kathman says, "Investors are following the 'greater fool' theory." More on this recommendation.