Much of the early hype surrounding the Internet was generated by a yours-is-bigger-than mine attitude. Share portfolio, that is. With news reports throughout the 1990s championing the 1,000 per cent p
Much of the early hype surrounding the Internet was generated by a yours-is-bigger-than mine attitude. Share portfolio, that is. With news reports throughout the 1990s championing the 1,000 per cent profits levered by those in the know, everyone wanted a piece of the action. Informed, and not so informed, speculators paid off their mortgages on the back of that lucky break, successes that saw the entire structure of share trading brought from the exclusive world of stuffy brokerages to a situation where any Tom, Dick or Harry had the pleasure of shouting SELL at their PC. But as many an advert has said: Share prices may go down as well as up, and while Tom made a killing, Dick and Harry saw their investments go up in a puff of smoke.
With many buyers and flotation beneficiaries well aware that spiralling share prices could be the chief revenue stream from their investments, stakeholders appear almost uninterested in the results.
Again, the highest-profile example of this philosophy is top-tier e-tailer, Amazon.com. While the traditional methods of wooing investors are profits and growth, amid the rush to be part of the 21st century windfall, such niceties have fallen by the wayside.
Certainly, though, many investment experts have poured scorn on the net sharks that established a site, a company name and a proposed product, with absolutely no intention of ever taking any thing into the market. These were purely cases of the Emperors New Suit. If I can talk it up enough, someone will either buy me out or I could take the IPO route. Either way, the potential returns could be the sort of money all but the most driven would retire on.
But nearly every high tech stock - and thus peoples savings - has taken a pounding in the last year as investors grew wise to the hype and disappointed by profits that appeared to be nothing more than an ever-receding pipedream.
Even Cisco, seen by many as the darling of the e-economy, is susceptible to trading floor volatility. The companys stock fell by $US5 in a single day last November after business magazine Barrons questioned its value.
This sort of turbulence cannot be borne by many armchair investors and people are becoming more cautious as a result of the downturn.
Research by ComPeer showed that last year, 648,000 trading orders were placed over the net in the second quarter of 2000, markedly down from the 930,000 deals made in the first quarter. Things havent improved much since then and clearly this is going to have a significant impact for online dealers. There was a slew of launches last year as companies tried to catch the home trader market, Egg and Virgin among others, and analysts question how many can survive with a downturn in trades.