Seismic Studies: Internet Stocks After The Selloff
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The Los Angeles area is famous for many things: tinseltown, silicone (not silicon per se), amusement parks, and shaking up the terra firma on a regular basis with earthquakes.
Therefore, it's ironic that every year as Spring Internet World gets sprung, the Internet stock sector gets slammed. I saw this phenomenon last year and again this week as ISDEX peaked early to new highs and then settled April 15 in a two-day trembler after profit taking.
Combine the geography and lexography and the only word for it is an "iQuake," a seismic jolt through the Internet stock landscape. The 2.3% ISDEX drop doesn't reflect the drop and slight rebound. April 14 ISDEX lost 55 points, more than 3x April 15's ripple.
Even so, about half the stocks in ISDEX ended the week since April 6 up. But today let's see who's down.
If the correction was due to underlying fundamental reasons like revenue, earnings shortfalls, or greater-than-expected losses, lack of traffic growth, and the fact that the bearded ladies investment club logged off eBay, then I would be worried. But I don't think that's the trigger here.
The drop from all-time highs was simply the result of investors withering nerves as the skyscrapers swayed in the cloud-driven heights while the Dow and NASDAQ looked like one-story flats.
Seeing the gains sent investors to the "take profit now mode." I think investors should always know what they're comfortable with on the high side and low side--their tolerance for reward and risk--and consider taking their cost basis off the table as their positions move around.
So let's take a walk downtown after the iQuake and see which stocks look like they could rebound now that I think the dust may have settled a bit:
|ISDEX ®||15-Apr-99||% change||Point change|
|The Internet Stock Index||close||from||from|