Internet stocks:
A probable path
to riches
Internet stocks:
A probable path
to riches
by James Dines
The Dines Letter
There
is so much gibberish around the Internet that we hope we are coming across
as loud and clear as a bugle in a Boy Scout camp that investing in these
stocks is a probable path to riches. We have been begging people to buy
Mediconsult.com (MCNS) since it was 43 cents on 9 Oct 98, and when
it got as high as 10-7/8 on 14 Dec 98, buyers were rewarded with a mind-blowing
gain of 2,430% in 8 weeks! We still believe that Internets rank among the
biggest profit opportunities we have ever encountered and hope that in recent
years our long-term TDLrs have cashed in on them. "The Original
Internet Bug" (TOIB) strikes again!
But
is it too late to buy? We strongly believe that it is still very early in
the Internet game. According to the latest Roper poll, nearly half of online
service users say the Internet has become something of a necessity in their
lives, were they stranded on an island, two-thirds would rather have an
Internet connection than a phone or TV. Some 51% prefer using e-mail for
communication with business associates to using the telephone (35%) or regular
mail (5%), ominous for the Post Office. Half of those with laptops said
they took them along on vacation to go online. With only one-out-of-four
households in this country now using the Internet, and our expectation that
it will rise inexorably toward 100% in coming years, not to mention internationally,
the sniveling losers who have been against investing in the Internet all
the way up are clearly communicating only gibberish.
So
how will we know when to sell? One of the methods on which we intend to
rely is Mass Psychology. Until now, professionals have sneered at Internets,
such as one reporter on CNBC calling bulls "Internuts." Stock
buyers so far have been primarily the public, far-sighted individuals (such
as TDL subscribers)! However, a wide swath of professionals will eventually
be lured in, and that will be one of the signs of a Top. We are now at the
stage where brokerage firms are displaying newly-hired "Internet Security
Analysts" on television, usually very young and, while bullish on the
Internet itself, opining that the Internet stocks are "too high to
buy just yet." Utterly lacking is the recklessly headlong gambling
that will be seen near the Top. Public buying has been orderly so far, contained
within established Up-channel Lines because optimism is still fearful rather
than confident. Unfortunately, brokers are actually beginning to recommend
Internet stocksMerrill Lynch, for example, favoring Lycos and 24/7 Media.
yet, hypocritically, most brokerage houses speak gibberish out of both sides
of their mouths, bullish on the Internet, yet febrifugally raising requirements
from 35% to 50% on margin accounts to force some selling! Nonetheless, because
broker optimism generally still includes caution, we still regard the Nets
as bullish.
But
how could we detect the absolute Top Formation of the Internet stocks? It
is certainly unrealistic to expect to get the top dollar, but if we could
at least hopefully get out within 10% or 20% of the highs of these incredible
rises, we would be more than deeply satisfied because it is deucedly difficult
to use properly-placed stops with such volatile movers. We have our work
cut out for us, but, obviously, selling should be done when there is an
acquisition, such as talk of MCI Worldcom acquiring Ozemail (OZEMY), one
of the few non-US Internet stocks in our Recommended Internet List. MCI
Worldcom is already in our Supervised List #1, and there is no point duplicating
it, so we will liquidate Ozemail into strength, and are now shopping for
its replacement with a new Internet recommendation to our loyal, long-term
TDLrs.
One
of the more important danger signs will come from Mark "Wrongway"
Hulbert, who was intensely bearish on stocks at the September Bottom, and
has mistakenly remained so all the way up. Nobody is right every time, but
as we study Wrongway we find him so consistently wrong that we value him
as an inverse Indicator; having written many nasty things about newsletters,
he has developed that peculiar arrogance often found concealing profound
market ignorance in inverse proportion to his true market understanding,
such that when something goes in one of his ears and out the other without
anything to block the traffic, it leaves a vacuum filled with gibberish.
The type who would take a pain killerand pass away. Here's our offer to
Wrongway (who reads TDL): if you'll stop telling outrageous lies about newsletters,
we'll stop telling the truth about you!
Until
then, we'll let our Internet profits run."
Editor's
Note: James Dines is editor of The Dines
Letter, P.O. Box 22, Belvedere, CA 94920. The Dines Letter is one of
the oldest and most respected stock market newsletter of its type in the
world. Dines, "The Original Internet Bug," says he will reveal
the single most positive element in the entire Internet picture, one factor
that he believes has not been noticed by anybody else. The Bull & Bear
highly recommends The Dines Letter. A "Look-See" 3-issue trial
is available for $49. A full one year, 20 issues, subscription is available
for $195. To order call 1-800-84-LUCKY. You will be in time to receive Dines'
Forecast Issue 1999, a 30-page blockbuster
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