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Dot Bombs Turned
to Dot Profits; Really Big Profits |
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2001 to 2003. What a miserable period
for tech stocks. Really, it was pretty horrendous for all stocks. The late
90's were characterized by a frenzy of financing activity for anything
"Dot-Com" related. The first big Dot-Com stock I remember was Netscape-
the guys with the first feature laden browser. The IPO was in 1995. I seem
to recall the stock running from the 20's to something like the $175 mark
over 18 months.
Netscape kicked off the era
of dot-coms in the late 90's. Wall Street developed a huge appetite for
over financing any business plan in the hand of any CEO who had a graduate
degree. Hundreds of millions of dollars were thrown at concepts. The "if
we build it, they will come" Field of Dreams mentality ruled the markets.
It all came crashing down in March
of 2000. The greatest short squeeze in history rocketed the NASDAQ above
the 5000 level, and stocks reached absurd valuations. Then common sense
took over. The market tried to rally back in the summer of '00, then capitulated
for real in the Fall.
By 2001 the dot-com boom was over.
The market grabbed some sanity. EPS, which was "eyeballs per share" in
the dot-com boom, turned back to EPS- earnings per share, once again.
There was nasty carnage. The dot
com stocks absolutely cratered. Venerable old line Merrill Lynch ended
up with the worst track record in the Dot com underwriting world. Analyst
and dot com poster boy Henry Blodgett, the Merrill Lynch wunderkid was
inundated with SEC investigations.
As if the demise of the dot boom
wasn't tough enough on investors, in September of 2001 the World Trade
Center terrorist attacks sent the markets reeling once again, and put the
American economy into a semi comatose condition for at least six months.
This was followed in short order by the collapse of fraudulent company
Enron, World Com, and a few others.
All in all- a miserable time to be
in stocks. Like all pendulums, the dot com pendulum slowly but surely began
to swing back in late 2002. As it turned out, there were many viable dot-com
business models with the ability to generate significant top lines and
EPS. The Dot-com boom was way ahead of itself because consumers and users
simply didn't have quality internet access. The "If You Build It, They
Will Come" moto proved prophetic, it just took us a few years longer for
them to come.
Below are four charts. These are
big cap dot coms. The charts are measured on a monthly basis. These were
all beaten down dot-coms that had been abandoned by investors and given
up for dead. However, look at the money you would have made if you had
the courage to invest in late 2002. Guess what stocks they are. Answers
below.
Do you know what stocks these are?
Here's the list: 1. eBay (NASDAQ: EBAY) 2. Yahoo! (NASDAQ: YHOO)
3. Amazon (NASDAQ: AMZN) 4. Akamai (NASDAQ: AKAM)
Ebay - $10 to $60; Yahoo- $5 to
$40; Amazon- $8 to $6o; Akamai - $5 to $50. These stocks all made these
moves for their oversold levels in 2002 to the end of 2003.
The point? There was a lot of money
made in dot-coms that had been given up for dead by investors with the
courage to act when the market hated the stocks.
How about an OTC Journal example?
One that you should all be participating in right. Check out this chart-
it's a dot-com that was given up for dead earlier this year.
Yes, it's my Number 1 microcap pick
right now, and was featured as such in the September
6th edition entitled Wake Me Up When September Ends. This stock
made another multi month high today, and appears to be destined for $2
in fairly short order. This is a chart of Commerce Planet- formerly
known as NeWave when I began covering the company 2 1/2 years ago.
This stock was $2 in February
of '05 when it hit its all time high, and earlier this year it hit $.19
at its all time low. This stock is trading up because the company has proven
out its business model and is generating significant growth and real profit.
This is another dot-com that was given up for dead.
What's the point of all this? Here's
the point- there is a lot of money to be made by investing in dot-coms
that were given up for dead.
This weekend I plan to publish on
another dot com that was given up for dead, but has turned back in the
right direction. If you liked CPNE as it rebounded through $.40
to $.60 to $1 to $1.30, this stock is for you. This stock has been
trading between $.10 and $.20 for over two years, and is finally
breaking out on a fundamental basis. I covered it in 2001 when it was north
of $1.
Volume has been increasing of late,
and the stock is starting to wake up. It could be an extraordinary opportunity
to make money if you like the theme. Tune in this weekend. Decide for yourself
if you agree.
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