Readers React: Net Bulls Still in Charge

Readers continue to flood the Fund Forum with Internet investing war stories from Monday's selloff and Tuesday's recovery. And if our highly unscientific peek at Net investors' behavior is any indication, individual investors are a far stickier bunch than is often thought. For every person who panicked and sold Monday, 10 invested more while the sector was under siege. The selloff even gave some wannabe Net investors the courage to get into the fray.

The ratio of Internet bulls to bears responding to our Tuesday query about Net investing habits was about 20 to 1. And faith in the Internet's leading brand names is strong, even among the most timid Net investors.

Also, contrary to popular belief, our readers say they do understand the risks they take. Oh yeah, and plenty are female -- roughly one-eighth of the email came from women. On the whole, the thoughtful, insightful and often witty stories that readers told about their reaction to Monday's selloff reveal investors' hopes for the Internet's future as well as their fears and dreams about its investment possibilities. Here's more of what you had to say.

"I sat dumbfounded and in shock Monday, as I watched my portfolio lose $100,000 (in addition to the $100,000-plus on paper I lost the week before)," writes Christine Campbell. "However, I decided to gut it out," she says. "I am in these stocks for the long term and bought more Yahoo! (YHOO) [Tuesday] morning."

Before Monday, "I sold half of my America Online (AOL) at 170," writes Gerald Reed. "I didn't sleep much Monday night. But I held on and regained over half of Monday's loss on Tuesday. I would have bought more AOL on Monday afternoon if I had more cash. I had used the cash raised from AOL sale to buy @Home (ATHM) at 180 (Ugh!). This is the place to be, but you have to have a good stomach for volatility."

"There is not one Net bubble," writes Jim Burr. "This is a seething cauldron of evolutionary stew. Bubbles are popping continuously. Some have burst; others are just beginning to nucleate. Suggesting the bubble has burst is like discussing quantum mechanical fluctuations in the density of the universe in the first billionth of a second after the Big Bang. There will be many bubbles. And with each will be the opportunity to make a ton of money in the expansionary phase."

"Where is everyone's thinking?" demands reader Lloyd Piercey. "Don't you realize we are the Baby Boomers that never got in on any of those big blue-chips in their heyday? Now we see the next world order of blue-chips coming and WE ARE NOT GOING TO BE LEFT OUT!"

"Bottom line?" writes Craig Colburn. "AOL was trading in the upper 80s at the beginning of March; after [Monday] it was 115. Trust me, I'll take 30% in six weeks."

"I've owned AOL, @Home and Infoseek (SEEK) for one to two years, and they are all WAY above where I got in," adds Colburn. Still, he confesses: "I have the certificate for my AOL in a safety deposit so I won't do something in the heat of the moment -- like sell it."

Then there were some bears. "I think sanity has begun to return to the sector, and that people are finally listening when the folks on CNBC and CNNfn give statistics like AOL's 700 price-earnings ratio, whoops, now it's 500 P/E," writes Carrie Rountree. "It was swell while it lasted, but at some point, reality has to return."

"Since the February dip, I have been shunning e-commerce and portals," writes John Larcheveque. "I am now short TCI Music (TUNE) and may short other ridiculously valued e-commerce stocks. I would not risk shorting Amazon.com (AMZN) or eBay (EBAY) (at least not now)."

"The bubble has burst, and this downdraft is just a start," writes Patricia McLean. "I have been in the market almost 20 years, and the overextended prices in the Internet sector were bound to start to roll over."

But bullish sentiment still prevails. "The Net is only going to get bigger and better, and the companies that drive the equipment and services will prosper big time. And I hope to ride their stock coattails," says Charlie Pittman.

"I am long CMGI (CMGI) and Inktomi (INKT) -- and I intend to stay long," writes Mike McTague. "This Internet thing is the nearest thing our generation will ever get to the Industrial Revolution, and I want to be in there now."

"On Monday, I sold Dell (DELL) and AOL at a loss as it was headed south," writes Robert Stark. "On Tuesday I bought Knight/Trimark (NITE) and CMGI and saw a very nice profit. I am hedging my bets by usually closing out my positions daily, but I have Yahoo! and AOL, which I've held long term, and am very long."

"I deposited $20,000 of my 1998 SEP IRA contribution to the (WWWFX)Internet Fund last Friday," writes Richard Whitaker. "I took an immediate paper loss of over $2,000 on Monday morning. I can still put another $4,000 in my SEP for tax year 1998 and am going to do so."

"No, I most certainly didn't sell my shares of the (MFITX)Monument Internet Fund that I had just purchased the previous week although I regretted jumping the gun," writes Carol Hale. "Would have made out better if I had waited until this week to buy, but those are the breaks. I remember years ago buying an unknown stock called Microsoft (MSFT) and then getting cold feet when it dropped a few dollars (it was about 29 in those days). Idiot me lost faith, got scared and sold Microsoft! Aggh!"

Thanks to all who shared. Send any more questions and comments to [e-mail], and please include your full name.

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