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To: Bill Harmond who wrote (59457)	6/1/1999 9:18:00 AM
From: tonyt	Respond to of 164684

>Do you know how to post a link?? Cranky today? Anyway, I don't spend all my time reading this thread, and I did't want to post an article that had already been posted, I thought I'd ask first. By your response it hasn't been posted, so here's the article: May 30, 1999 MARKET WATCH Pop! Goes the Bubble Related Articles The New York Times: Your Money Forum Join a Discussion on Investing By GRETCHEN MORGENSON EW YORK -- Has E-phoria ended? Highflying Internet stocks look mighty weak. Even on Friday, when other NASDAQ stocks were strong, many Internet shares couldn't muster their typical big moves up. As the week ended, shares of Internet concerns were well off their mid-April peaks. The Interactive Week index of 50 stocks is down 17 percent from its highs, while Thestreet.com index of 20 Net companies has fallen 26 percent since April 12. Battered E-investors are wondering whether the recent action is simply a pause in an upward trend or the beginning of the end of a glorious ride in these stocks. While no one is certain, there is a host of reasons why the downturn may continue. Broadly speaking, investing in Internet shares has changed. And investors who don't realize that are vulnerable. The factors working against these stocks are both macro and micro. One of the big-picture problems is rising interest rates -- bad for almost all equities, but especially damaging to stocks of Internet companies, which rely heavily on debt to finance their money-losing operations. As interest rates rise, these companies' debt costs do, too. Recent figures on Web use are also worrisome. Merrill Lynch's estimates of the total number of Internet users declined from 61.6 million in March to 61.1 million in April. While Merrill's resident Internet bull, Henry Blodget, cautions that one month may not make a trend, he points out that April's drop was only the second such decline in the last 12 months. Perhaps more significant than either interest rates or Web use, however, is the shift in supply and demand that has changed the way these shares trade. Simply put, there are many more E-sellers than there were before -- a change, almost imperceptible, that is weighing on many Internet stocks today. Start with the throngs of companies taking their shares to market. According to Commscan LLC, an investment banking research company in New York, there have been 69 initial public offerings of Internet-related shares so far this year. During all of 1998, there were only 42 such offerings. And while E-commerce companies accounted for 11.5 percent of all new issues last year, excluding closed-end funds and American depository receipts, Internet IPOs have accounted for 44 percent of new stock issues in 1999. Also adding to supply is the fact that as newly public Internet concerns age, more stock hits the market from executives and insiders. These individuals are generally prohibited from selling any shares until several months after the IPOs. Even as extra Internet shares flood the market, demand is drying up. One measure: The money going into Internet-related mutual funds has dropped from $470 million in the week ended April 14 to $34 million last week. Complicating matters is a small-picture issue: a dearth of natural buyers -- the short-sellers -- waiting to step in even if these stocks keep falling. Investors willing to risk their money selling stocks short must buy them back later to close their positions. As a result, short-sellers represent future buyers. But since so many who bought this way lost their shirts betting against Internet stocks, few remain standing or solvent. At the height of the craze, Internet buyers were many while the sellers were few. Now the tables have turned. Ah, well. It was fun while it lasted.