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| The Investorville Post - July 2000 |
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Greetings, citizens of Investorville.
This is the latest monthly issue of The Investorville Post, an email publication designed to keep you up-to-date with what's happening in Investorville, your personal investing community. It's completely free but delivered only to registered users of Investorville. (We will never give your email address to anyone. If for some reason you don't want it, you can choose not to receive it from the user profile page.)
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| Table of Contents: |
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- - - Hot Boards - - -
- - - Overheard - - - - - - Tomments and Tommentary - - - - - - June Investing News - - - - - - Question of the Month - - - - - - Suggestions - - - - - - Reminder - - - |
| - - - Hot Boards - - - |
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These boards received the most posts last month. Visit them to check out what all the buzz is about.
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| - - - Overheard on Investorville - - - |
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- - Amazon, not Amazin' - -
Late in the month, e-commerce bellwether Amazon.com came under fire. One analyst suggested the company was going bankrupt and that their debt was unsound. Even as others came to the defense of the e-tailing giant, the stock price took a beating. With the E-commerce sector's slump finally hitting the biggest of them all, investors have to wonder, "Is this a buying opportunity or the death knell for e-commerce?" Investorville citizens chimed in with their opinions. ag8ion, for one, was not surprised as he pointed out a signal of distress, "Yesterday's stock slump in AMZN should not have come as any great surprise. At the same time that company executives were on T.V. criticizing the press and claiming that everything is just dandy, they have been unloading their shares at a record rate. I've just checked the insider selling and have found over 200 million shares have been unloaded in the recent past. It also shows in the latest filings that this continued at least up to June 14th. We'll soon know if they are still selling but it's probably a safe bet that they are." MaxPower observed that Amazon had previously been able to obscure its financial situation, "[T]here was some discussion on this board awhile back on Amazon as a venture capitalist. Amazon was able to mask their non-profits by investing heavily in other dot coms that gave them great returns (ie a cash infusion). But with many of those investments at rock-bottom levels, Amazon no longer has the ability to fill the cash tank. They really have no choice but to focus on profitability, or they will run out. I'm not sure if this was part of the analysts discussion on Friday, but it seems like it really is an integral part." KeithG concurred and added additional concerns, "I have to agree with MaxPower about the importance of this issue. Moreover, there is the possibility of a scary, nasty, chain-reaction for poor-old amazon...if Amazon's stock really starts to fall apart, the rest of the dot.com world is going to be hurt by it as well--Amazon has always been held up as proof that [e-commerce] could work. This will hurt amazon's investments which will in turn hurt the sector...." Gatsby began thinking about other resolutions to Amazon's future, "Amazon is so low right now (thirties) that it makes me wonder if it's time Walmart seriously considered buying it. Doesn't it make sense? The only drawback I could see is that many of Walmart's customers are still not online, but you can always set up call centers for them anyway. What does everyone think? If not Walmart, why not someone else? Anyway, I know it's been said, but if Amazon isn't going to make it, what pure online etailing play will? The answer, of course, is none." hecubus took a more bullish view on Amazon's position in the etailing universe, "Everyone seems to want to lump amazon in with all the other etailers that have been slumping and preparing to go under. But, this is going to be survival of the fittest and instead of taking this downturn as a chance to dump on Amazon, why don't people see it as a positive? The competition is dying--all these little guys that have tried to specialize are going to fade away and the big guys with diverse products are going to survive. The fact that these little people can't survive is good for amazon in the same way it was good for walmart and other chain stores when the specialty shops couldn't compete anymore." So, what is your take on Amazon as an investment? Post your thoughts at: http://www.investorville.com/ubb/Forum2/HTML/000112.html - - Other noteworthy comments from the month of July - -
To read these comments in full, click on the corresponding links. |
| - - - Tomments And Tommentary - - - |
| People are still talking about the second Tomments and Tommentary, a series on stock picking accountability. Analysts bore the brunt of Investorville's ire, even as they helped one investor:
Machiavelli said, "Here's why I can't stand analysts. Yesterday, one of them (I apologize, but I don't remember who) lowered their price target on Compaq from 45 to 25 (it was trading at 28, so a real stretch for this guy!) because he said Compaq had too much inventory. Compaq promptly closed at 25. Go analyst! Oh wait... But finally, a company took a stand. After the bell, the Compaq chief said that the problem is not too many inventories, but not enough! In fact, they are having trouble filling orders (in a positive way), and this analyst doesn't know a thing about their company. Too many companies are letting irresponsible analysts go to far in trying to get their name in the news or get on CNBC. It's time more companies responded to these downgrades/reasonings in order to protect their shareholders. However, on the plus side for me, it was ANALYSTS who helped the telecom market today by saying yesterday's worries about the state of the industry are unfounded. I guess they aren't all bad..." Dude wondered, "Which is worse, partial accountability or no accountability at all? Jim Jubak is fairly well known, mostly thanks to his prominent placement on MoneyCentral. And he tracks his own picks and reports how they're doing: http://moneycentral.msn.com/articles/invest/jubak/5473.asp But this is only what he's currently holding, along with what he's 'recently dropped'. That makes it too easy for him to hide mistakes, by taking them out of his portfolio... once they're no longer 'recently dropped', they're gone without a trace. As far as I can tell, he doesn't reveal his overall performance, nor does he keep detailed records of when he makes adjustments to his predictions (which he seemingly does pretty often). Perhaps one of these new 'rate the gurus' sites is keeping track of exactly how he's doing..." lockin was on the lookout as other media outlets picked up on the Tomments topic, "An article on TheStreet today sums up the problem with analysts: 'Analysts have many masters, with diverging interests. Research must help the brokerage's sales force generate orders. It must also guide institutional clients (big mutual fund companies like Fidelity or Putnam). And, increasingly, analysts play a vital role in helping their firms drum up underwriting and mergers-and-acquisitions advisory business. The individual investor is decidedly lowest on the totem pole in the hearts -- and wallets -- of analysts because they deliver the fewest bucks to Wall Street firms.' With such large conflicts of interest, it baffles me that anyone still listens to what these analysts say... hopefully everyone will come to their senses soon and stop paying attention to these puppets." hecubus responded, "Well, lockin, I am not disagreeing with you about how deceptive this whole analyst game is, but I think that the fact that theStreet can write up a report like this one gives people a good reason to listen to what they say. All investors are looking for predictive power and if there is some measurement of who's right and who's wrong most of the time. I think that is what this whole discussion is getting at--if people can figure out who to listen to and who not to, then these analysts have value. Whether it is because they are smarter than me, have more information than me, or that the masses will listen to whatever s/he says, as long as there is some consistent cause-->effect relationship, I can use it to my advantage." To read or join in on the discussion, visit Tomments 2 Last week, a new Tomments and Tommentary article was published: "What is the Difference between Gambling and Investing?" In it, InvestorGuide.com CEO Tom Murcko looks at how these two terms have begun to blur together with the advent of internet investing. Upon detailed analysis, some people who are trading stocks probably are gambling, while some people betting on sports are actually investing. What about you -- are you gambling or investing? The distinction may be more important than you realize. KeithG fired the first salvo: "Once again, Tom, some interesting observations of the investing world. I'll have to think more, but one of the things that really struck me was the idea that professional gamblers actually investing through the betting process. I think that gambling and investing have been defined in my mind by the mechanisms--things you do in a casino are gambling while buying stocks, options, etc. is investing. But that is a lousy way to define the terms. It seems pretty clear after reading you argument that day-trading is really like gambling--I also think that the chemical reactions are probably similar. And, really well-versed sports gamblers are really investing--doing research, knowing that they're not going to win every bet but looking at it long-term. It seems that trying to find the characteristics of each activity is of far more value than using the mechanisms. I guess that some people are bearing the stigma of "Gambler" unfairly while some people benefit from the perception of "investor" without deserving it." To read the latest Tomments and Tommentary and join in the discussion, visit Tomments 3 |
| - - - June Investing News - - - |
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Even if you only have five minutes, make sure you don't miss this important investing news from June:
If you would like to receive investing news like this every day, visit http://www.investorguide.com/daily.htm and subscribe to InvestorGuide Daily, our free daily newsletter. If you would like to receive investing news like this every week, visit http://www.investorguide.com/weekly.htm and subscribe to InvestorGuide Weekly, our free weekly newsletter. |
| - - - Question of the Month - - - |
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Last month we asked: The Nasdaq is 32% off of its highs earlier this year and the Dow is 10% off of its peak. How has the market's recent volatility, especially in tech and internet stocks, affected your investment strategy? Do you buy on dips? Are you sitting on the sidelines until things settle down? Do you try to spot stocks ready for a quick jump, or are you in for the long haul?
smario started by explaining, "My strategy really hasn't changed. The only thing I did do was buy into a non-tech heavy mutual fund to offset some of the risk. A lesson I did learn, I hope, though, was know when to sell. My point is that even if you are long term, you need to set an expected rate of return each year for each of your stocks. And if 3-year's worth of expectations happens to come in a few months, then it would be smart to do a little profit taking. I didn't do that this time, and lost a lot of "potential" profits from my inaction. These are all stocks I would have bought back into anyway." wassup? concurred, "I know a lot of people who KNEW the market was overheated, but they wanted to ride the wave for a little too long and got burned. In the future I will try to minimize my downside risk by taking some profits as well." cjw2001 seemed to have learned that lesson already, "In a way I chickened out and sold everything when it was down 15% from its high, recently put my money back in seeing that many of the high flying stocks were down anywhere from 25-75%. So though I sold many stocks for a loss, if I would of held on it would of been a bigger loss, in the short term of course. So to answer the volatility question? It has made me no longer a buy and hold type of investor, for the gains in the last week after buying many stocks at their low has gained back the 15% that I lost in the selloff." sanddollar1 posted, "My tactics have changed somewhat. Since the volatility is going to be there I am trying to use it to my advantage, much like some of the others that have posted. I sold in early March and have not reentered. That means missing the gains of last week but am anticipating the summer wreck. Take your profits and re-enter at a lower price." hecubus applauded sanddollar1, "I think this is really the way to play a volatile market. You buy stocks that you believe in and would be willing to hold for a very long time. If the price runs up, that is great, but you have to understand that some of that is probably unwarranted. You set yourself a limit on how long you will hold before you let go. Then, if you feel the company is devalued, you get right back in. There are irrational investors out there, and you want to take advantage of that irrationality, not pay the price for it." This month's question: The Nasdaq is only about 20% off its all-time high, but many individual internet stocks are currently trading for one-fifth of their highs or less, including Drugstore.com, TheStreet.com, NBCI, and eMusic.com. Is this drop warranted, or an overreaction? Are there bargains to be had now? Is the fundamental story of the internet intact? http://www.investorville.com/ubb/Forum30/HTML/000016.html If you have an idea for a question of the month, please email it to mayor@investorguide.com. |
| - - - Reminder - - - |
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