To: Slumdog who wrote (16148 ) 12/21/1998 5:26:00 PM From: Platter Read Replies (2) | Respond to
From Briefing.com..."AMAZON (AMZN) CMG INFO (CMGI) EBAY (EBAY) ONSALE (ONSL) UBID (UBID) YAHOO (YHOO) Sometimes Briefing.com feels like Grandma at the kid's dance. "Watch out, you might get hurt doing that!" At least, that's the kind of criticism we get when we tell people that Internet stocks have lost their footing. But what can you say at this point about the action in Internet stocks? There are only three ways to look at today's action: 1) From a business fundamental point-of-view. Forget, its a broken record, they are all way overvalued by any traditional method. 2) From a daytrader point-of-view: just ride the wave, go in and out frequently. 3) From the ponzi scheme point of view: so long as some else is buying, the party goes on. It is the last one we want to address today. If you already hold positions in these stocks, great, enjoy your profits. The most rewarded are those who invested at the very beginning, and didn't sell. But the person who will be ultimately be burned the most will be burned in the following way: Having watched the drama from the sidelines all year, they finally rush in, in a big way, finally giving in to the why wasn't I a part of this?" terrible feeling. It is closely associated with the following thoughts. "Let's see, if I had only used margin as well, I could have gotten 2,000 shares, Holy Cow! I could have made $80,000!" That type of thinking is natural when action like today happens. But the risk in these stocks now is there is no metric for gauging price. None whatsoever. Fundamental analysis is long since forgotten. Want proof? The total increase in market capitalization of the following stocks this morning was $4.6 billion. That's about the market cap of stocks in the middle of the Fortune 500. The total market cap of these six companies is now $36 billion. That's higher than 13 of the DOW 30 Industrials. There wasn't any news from any of these companies to justify the action today. Daytrader point-of-view? Value doesn't matter, just get in early when the volume builds, and get out by 3:00. All value is conceptual, we agree, but when it is entirely conceptual, you have to be careful. But, to address the ponzi aspecct, at this point, new investment in Internet stocks has to be done very carefully. If you wouldn't put $100,000 grand down on the crap table in Vegas, why put it down on Wheel-of-Amazon? It's perfectly okay to play these stocks short term, so long as you recognize exactly what is going on, and make sure that your personal financial situation can withstand a 50-75% overnight loss in your stock. We aren't predicting that for any of these big name Internet stocks anytime soon, but there are far too many examples in past history of what happens when a mania ends. So, if you are plagued by "after-the-fact" wishful thinking, be very cautious. People with those feelings are always the last ones in. Now if you'll excuse us, we have to get back to our rocking chair.
