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Technology Stocks : ZD Inc., Ziff-Davis (ZD) -- Ignore unavailable to you. Want to Upgrade?

To: Geoff Altman who wrote (482)	3/15/1999 9:07:00 PM
From: Maverick	Read Replies (1) \| Respond to of 855

Shorting Net stock is a bad idea. Internet bears not contrite even as stocks keep rising Meantime, new Internet stars, like Henry Blodget, have been created. BY ADAM LASHINSKY Mercury News Staff Writer It must be lonely to be an Internet bear. This species is tough to identify because even the investment analysts who are negative on Internet stocks don't like to acknowledge it publicly. Warren Buffett has been famously bearish on the Net. But he has a lifetime of other good calls to his credit. Consider, however, Michael Murphy, the genial and outspoken fund manager and publisher of the California Technology Stock Letter in Half Moon Bay. Murphy has been so fabulously wrong that his tech fund, down 8.2 percent last year, had the worst-performing three-year record of any technology fund, a ranking embarrassingly highlighted in a recent Wall Street Journal article. The shocker regarding Murphy isn't necessarily his performance but the minuscule size of his fund, $1.2 million, in relation to his ubiquity in the media. Murphy is unapologetic. ''This is clearly a massive financial bubble,'' he says, while noting some of the tech stocks on which he's been burned recently: VeriSign Inc. (Nasdaq, VRSN), CNet Inc. (Nasdaq, CNET), and Network Solutions Inc. (Nasdaq, NSOL). He's been right, as well. He claims to have made money last summer betting against shares of Yahoo Inc. (Nasdaq, YHOO), Amazon.com Inc. (Nasdaq, AMZN) and America Online Inc. (NYSE, AOL) before those stocks declined sharply. But he admits he's been watching shares of eBay Inc. (Nasdaq, EBAY) ''in awe.'' eBay's stock price ended the week at $142, about 24 times its split-adjusted initial public offering price in July. David Simons, the quotable and clear-thinking proprietor of Digital Video Investments in New York, resents the ursine label despite a consistent record of Net negativity. ''Is telling it like it is bearish?'' he wondered in an e-mail last week. Simons was featured in this column last summer noting his frustration over fast-rising Internet stocks. ''Any attempt at analysis is worthless,'' he said then. ''Even the bullish guys have given up. What's the point of sitting here and doing analysis? Certainly the professional investors are playing the greater fool.'' Since then, anecdotal evidence suggests professionals have gotten into the act too, tired of watching the amateurs rack up gains. Meantime, new Internet stars have been created, while lonely voices like Murphy and Simons have remained Cassandras. Henry M. Blodget, for example, was a relatively unknown analyst for CIBC Oppenheimer Corp. last year and now is the Internet maven for Merrill Lynch & Co., brokerage to the American masses. ''We regard the Internet as a global mega-trend, along the lines of the printing press, the telephone and the computer,'' Blodget wrote last week in his inaugural report for Merrill. As for valuations, Blodget notes that ''the fundamentals are important, but we would not talk ourselves out of buying a leader because of a small amount of hair on the story.'' The respective fortunes of these Net commentators yields at least one lesson: Betting against the Internet is a shaky proposition. Blodget believes the biggest risk isn't getting burned by a falling Net but missing the upside. Even Simons, still frustrated by high valuations, warns of the folly of selling Internet stocks short, a bet that shares will decline. ''Shorting is best done when the market is being rational about a stock but simply is overlooking something that may not be obvious,'' he says. ''But when a stock's price becomes untethered from basic facts and takes on a life of its own, shorting is extremely dangerous. It becomes a bet that the market will 'come to its senses.' Billions have been lost shorting Internet stocks on that premise.''