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Sometimes I think the people involved in Web businesses have an unfair advantage at this game. After all, I knew that The Street. com (TSCM: Nasdaq) uses Exodus (EXDS: Nasdaq) as a host and Kana (KANA: Nasdaq) as a mail-serve technology. I know our tech crew uses an Accrue (ACRU: Nasdaq) database to generate page-view reports. But before you accuse me of having a leg up, I sold most of these stocks long ago. Maybe because I see the inherent flaws in all of them, or because one of the systems went down a bunch of times (they all do), I knew there were flies on these technologies.
That jaded me. It kept me from going for the long ball in all three. I never thought they could get to where they went, let alone where they might ultimately go. These moves are breathtaking to anybody who has been in the business longer than a couple of years.
These stocks are ramping in ways most of us did not think was possible. Remember, we are in the supply-demand phase of this kind of technology, meaning that there are still fewer stocks out there than people want. The underwriters simply haven't created enough B 2 B supply to sate the marketplace. These stocks are simply symbols of where people want to be to make money. They are all hopelessly overvalued unless they execute perfectly every day of the year.
But right now, valuation is an irrelevance. Investor enthusiasm, capital, and a desire to "be in" the right stocks trump any sort of notion of overvaluation. One day there will be enough stocks and there will be enough competitors out there to make life miserable for everybody. Right now, though, there are just too few and the businesses are too strong. And a little knowledge, like the knowledge I had as a co-founder of The Street. com, only hurt, did not help me.
Random musings: Sellers finally materialized this morning. I had thought they had all disappeared. But in several instances I saw genuine institutional selling of some of the hottest stocks. This kind of selling was, frankly, new for this market. No one with any size -- typically blocks of 100, 000 -- save venture capitalists, had been seen on the sell side since the October lows. This kind of institutional selling bears watching.
Selling has all of the aspects of an illness. Someone gets it, and then it gets passed on if it isn't contained. It could be because of the holiday. (I know I am taking some time off to be with my family in the next three days. ) But I will keep an eye out for this to see if it develops into something bigger. Bibliography:
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Research essay sample on Institutional Selling Stocks Nasdaq
