This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Investing Beyond the Hype Cycle

Stocks in this article: PCLN AMZN GOOG FB DDD SSYS MLNK VMW RHT RAX

The cloud is in the process of rolling over in its hype cycle, just as it starts to achieve real results for business. You can see this in the stocks of VMware (VMW), RedHat (RHT) and Rackspace (RAX), all of which have fallen hard in the last few months as hype has turned to a demand for unreasonable returns that were never there in the first place.

Cynics may note that Amazon doesn't seem to have fallen like this. But it has dropped $25/share in price since January, from its high of $283 to its present price of about $258.

But with Amazon, it can be argued the cloud is just one piece of the business, which is a bet on the future of its physical infrastructure -- not just cloud but warehouses and logistics. That story remains intact, and has gone beyond the hype cycle. Thus, a loss of roughly $12 billion in market cap could be just the cloud coming to Earth.


Where the hype cycle really has an impact is on closing the door to new competitors, shutting off their financial oxygen. Piston Cloud, for instance, with its cloud stack you can load from a memory stick, or Nebula, with its $100,000 cloud box, may not get the prominence they might otherwise because they're just late to the party. They will have to prove themselves.

The hype cycle has a purpose. It's designed to attract capital to places that need it. It can deliver spectacular returns to those who know how to ride the wave.

But to ride it you have to time the market, getting out while the getting's good, or you have to be there for the long haul and wait for the cycle to crest before you invest a dime.

At the time of publication, the author was long DDD, RHT and GOOG.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs