Word: marketeers
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Dates: during 1990-1999
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They are now. Amazon's April apex, it turns out, was the top of the market for Internet stocks. On average, they have declined 32%, and many, including Amazon, have halved. So, is it time to declare the Internet bubble burst and set the Net stocks next to other flameouts, such as biotechnology (1980s), computer leasing (1970s) and, yes, tulips (1600s...
...fast. The Net wonders aren't dead. They're just going to behave differently as this industry, like so many before it, enters the next phase of development. That phase will include the creation of tons of stock as new IPOs flood the market in search of easy money (yours). And it will include the inevitable shakeout as investors sort out the jewels from the junk. The only question is, How fast will all this happen...
...deal. The 30-year Treasury-bond yield popped over 6% last week, its highest level in more than a year, and could well stay there. Speculative stocks (and Internet defines the category) tend to get hard hit when higher rates threaten to slow the economy and the market. There are also basic questions about Internet bellwethers, including AOL (Will AT&T shut it out of cable access?) and Amazon (Can it reverse slowing revenue growth...
Most troubling, though, is a glut of new Internet shares saturating the market, creating a supply overhang that could last through the summer. This is an entirely new situation for Net investors. In the past few years they have had little choice but to bid against rabid techies for the same handful of precious stocks, driving prices through the roof. Wall Street reacted as expected: by underwriting stock deals for every dot com in sight. A flood of new shares hit the market this year, and now the scarcity premium on Net stocks is gone...
...this lunacy? Not at all. "The stock market is acting perfectly rational with this Internet thing," says Charles Clough, chief market strategist at Merrill. "It is providing capital because this whole infrastructure has to be built, and it has to be built very rapidly...