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Technology Stocks : Net Perceptions, Inc. (NETP) -- Ignore unavailable to you. Want to Upgrade?

To: Jimbo Cobb who wrote (924)	5/27/1999 7:05:00 PM
From: James Sinclair	Respond to of 2908

One Lurker's Perspective I've been keeping an eye on this stock, mostly through this thread, since shortly after the IPO. I've invested in several companies in this industry over the past year and, for the most part, done pretty well. Let me state for the record I'm not short this stock, have never shorted a stock in my life, so please don't try to put THAT spin on the comments I'm about to make. NETP looks like a solid company in a growing market, so its long term future looks good. However, I see WAY too many posts on this thread to the effect of, "Company A's stock (another recent IPO) went through the roof when such and such happened (news, analyst report, etc). All we need is a similar event and we'll be flying" (usually in all caps or followed by multiple !!! for emphasis). I have a problem with this on two counts. First, my sense is that the psychology of the market has changed in recent weeks. Sure, there was a time when LemonAdeStand.com could go public and you could be sure of a double or triple. I doubt that's true any more. Fed tightening, phase of the moon, who knows. But as the mutual fund prospectus always adds, "Past performance is no guarantee of future results". Second, in my mind NETP is not an "Internut" stock in the same way as Amazon, Yahoo, or Ebay. Institutional investors haven't figured out how to put a value on an ecommerce web site yet (otherwise Amazon couldn't keep getting away with the "I only lose a little bit on each sale, but I make it up on volume" strategy). But NETP doesn't actually run web sites, it sells enabling software to other companies that run the web sites. Software sales is something institutional investors have a LOT more experience with. They've been through this before with relational databases, etc. One stock I often compare NETP to is Open Market (OMKT). On the surface, lots of similarities. Ecommerce software, good technology (they've got a whole portfolio of patents), impressive customer list, high profile investors. Only problem is, their management hasn't figured out how to take all those advantages and turn a profit. As a result, the stock has gone nowhere over the last year. Every quarter there will be a small runup going into earnings, but it fades right back when they submit another disappointing number. Every so often an Internet feeding frenzy will carry the stock higher for a few weeks, but it can't hold the gains. OMKT isn't going anywhere until it comes in with a couple good earnings reports that win the institutions' attention. I don't have any reason to think NETP won't be held to the same standard. A couple last words of advice. First, if you haven't read "The Gorilla Game", you owe it to yourself to get a copy. It really helped me understand why great technology doesn't always make a for great investments and what I should look for in a company before I make it one of the cornerstones of my portfolio. Second, if you're not familiar with the technical analysis tool MACD (moving average convergence divergence), you should learn about it. There's a thread here on SI, Subject 21346, that talks about it. Its great for spotting good buy and sell opportunities. Several of you here on the thread continually share about all the NETP purchases you've made during the current slide. Just think about how many MORE shares you could have bought if you had waited until the slide was over. The trick isn't to buy the stock when YOU think its cheap, but when the MARKET thinks its cheap. MACD helps you spot those opportunities. There. I've rambled on and said my piece. I'll go back to lurking now. Who knows, if the price stabilizes and the financials look good, maybe I'll get true NETP religion and join you. Good investing, everyone.