Rocketman wrote:
Everyone talks about internet stocks going bust. CNBC is getting to be an "all internet bashing - all
day" channel, in the same way that MSNBC is an "all Monica -- all day" channel. What is being
missed is this: internuts are busting all the time. Except for the "blue chips" (used loosely) of internets
such as AOL, YHOO and ... maybe some others, the internuts are momentum plays, and few of them
zoom up and stay there. It is just gambling, with money rotating from hot stock to hot stock. Will this
all end, and will they all go bust at the same time? Probably, and consolidation will happen, which is
good, IMO, for the prospects of MSFT, the internet blue chips, and the bandwidth providers.
I agree with the first part of your post, but not necessarily the conclusion. Yes, CNBC and the professional investment community (big brokerages, which charge big fees) are very critical of the Internet stocks. For good reason. They are scared s**tless. Why? Because this thing called the internet is taking power away from them. I am responding to you. I am a 29 year old graduate student sitting at my terminal. I trade stocks and options from this keyboard and computer. I put up my own website. Get the picture? The term is disintermediation. Or, in other words: we don't need YOU (full service brokers; traditional media; the powers that are/ were?)
Now, the powers say that the internet is just the latest Tulip craze... or like the radio stocks in the 1920s... or bowling stocks in the early 60s... the valuations are unreal, unsustainable, etc, etc. The implication is that this whole house of cards will collapse. Maybe. But not quite the way that the powers assume.
The buyers of EBAY, UBID, and all the other internet stocks are in the several hundred shares... that means individuals. Maybe there WILL be a run for the doors. But not all in the same day, or the same week. A thousand, a million, tens of millions of people like YOU, ME, and every guy who decided to be his own broker is sitting in front of his screen and saying, yeah, maybe I should take some of that money off the table in EBAY. And if EBAY tanks 50 points, maybe alot of investors will do that all at once. But I don't buy it.
I think there will be a lot of people at work on any given trading day and they will not be able to make the trade. And when they get home, they will still say, hey, I am still up 100% in EBAY or whatever, and they will not sell that day.
Or, perhaps at some collective, but unconscious level, this tulip.com mania is really a lot of individuals saying -- f**k the normal valuations. just screw the wise, professional brokers who do this full time, and charge me 50 or 100 dollars per trade. they tell me that AOL can't trade at a PE of 300. I say screw it. I can buy AOL at PE of 100 and profit because it is cool and it will be bid up to PE of 300. Maybe not by Magellen. But by a lot of other investors like me who think this is a cool thing that fundamentally changes the whole way media works.
I think that CNBC and all the "professionals" that they have on, not to mention the WSJ with its article on the "Internet Craze" are all scared to death that we (me, you, and every one who takes charge of his own finances) is going to put them out of business. Schwab is bigger than Merrill; so I guess Merrill can't just buy an online brokerage if that cute idea gets some steam behind it.
I think we are going to have our January Effect bounce, not hindered by an Internet bust. The "professional" managers are getting lots of money (though less than last year, and in a few years, I hope much less still... I just took my IRA out of a fund that underperformed the S&P) and they are going to have to put it somewhere. You can bet they are going to put it in MSFT, CSCO, INTC, WCOM... and yes, maybe even in AOL, and YHOO... despite what they learned about valuation in business school or on some CFA exam. Screw em... their days are numbered. We are in charge. |
