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Stone-age, Iron-age, Industrial-age, Computer-age and now the " Information-age " or the " Electronic-age "? Take your pick, I feel older just typing this. It used to be that someone could look at price, past and future earnings, plus a few other intangibles and make a decent prediction on a stock purchase. Not any more; now that everything new is a " something or other " dot-com.
Just a couple of short years ago, no one would think that announcing only a slightly lower than predicted quarterly loss would make a stock issue skyrocket, like for instance Amazon.com? The United States stock market is getting down right weird. How can an internet search engine with very little " real " property like Yahoo, become better financed than General Motors in a few short months? How about the collection of harddrives, servers and telephone connections offering people free webspace, that loses millions of dollars a year, which becomes a billion dollar source for adult material virtually overnight, like TheGlobe.com ( Yes, Theglobe is - was, maybe still is - hosting a semi-mirror of Bongo's Fallout Shelter. )? Then, an electronic cookie manufacturer like Doubleclick.com, whose inventory is reduced when you turn off the power instead of when you eat the product, makes more money in a month than a real cookie manufacturer like Famous Amos ( you know, I actually purchased a few bags of cookies from Amos himself personally, in Hollywood, way back when they were still a family operation and the product tasted different ).
If it were just a handful of these questionable ( yet profitable ) offerings, then I would say it is a beneficial thing. But, when any old dot-com offering gets the instant support of hundreds of millions of public dollars, it only fuels the fires of internet fever greed! I-village, I-bid and I-trade; there is no end in sight. From automobiles to zebras ( probably ); you can procure it via the Internet. Everyone sees the benefit of an electronic, instead of paper, universe. The people love eliminating a large part of the accounting material costs, and Al Gore gets to save a few trees, after hugging them ofcourse ( What Al doesn't know is it probably only means, they can sell more lumber to Japan? ).
Heck, I remember when the NASDAQ was a pup; 2,500 no way. Now it's 2,500 plus and don't look back. Even the DJIA is over 10K for the first time and with the help of high tech stocks listed on the NYSE, it will never look back. Sure, there may be a temporary correction or two in the market, but it will rebound even higher each time. Part of this success can be directly linked to the electronic trading market!
Datek Online, E-Trade, Fidelity, Mr.Stock, Schwab, ScotTrade, SureTrade, Trading Direct, the list is endless. They are all looking to capture the quick, cheap and easy stock transaction market; and this doesn't touch on the blossoming day-trader market ( and that may a be whole new ball game in the not so distant future ). In a self perpetuating cycle of growth, the Internet stock trader makes transaction after transaction on IPOs ( initial public offering to the stock market challeneged in the audience ) dealing with the vehicle of their trading, the Internet structure itself.
All of a sudden, the stock trading environment is inundated by a mass infusion of traders, all who are emotionally interested in the computer/internet/networking securities market. An IPO of a politically correct website dealing with a popular minority or subject driven topic, has an undeniable certainty for at least a short term period growth and an influx of enough cash to cure just about any foreseen monetary ill. A small cap stock with a volume of two million shares traded may go up ten points in one day, but a larger cap stock reporting great earnings or a breakthru in it's field, may only go up a couple of points on a volume of twenty plus million shares traded, simply because it was not an Internet related business. Price to earnings ratios used to be a great indicator as to what stocks to buy, but now-a-days a stock in single digits, with a fraction of the P/E number of an Internet stock, may grow at a miniscule level in comparison to that Internet stock, with the P/E in the thousands? Go figure, huh. The lunatics have taken over the asylum and they have no plans to give it back any day soon.
So, forget the traditional measures of assets and earnings, and supply and demand, unless ofcourse you are refering to the supply of shares of internet stocks and the demand for them. It is now, who has the bigger spread in Barrons or PC Magazine, not the profits or loss of the particular business in question. Emotion is everything in the NASDAQ section of the stock market, now. It is sort of like " Wag The Dog ", but with the financial publications controlling the horizontal and the vertical? Hopefully, the widely held industrials will not be thrown into the background and damaged beyond repair. The industrials are the backbone of our country and society in general. After all, if it wasn't for the instrumentalities and machines, you wouldn't be connected to this world-wide web thing you are reading this opinion article on! Oh yeah, lastly; don't forget about what I said last year, on Uncle Sam wanting to get his mits on the budding Internet and turn it into a taxable/regulatable pawn/cash cow ( see: Utilize The Internet? ( 11-13-98 ) ).
- Bongo ( Trade this? )
