Truth Serum: The Irresistible Force and the Immovable Net Stocks

OK, you're not going to get the same ol' song about Net stocks. You're not going to read here how the wishful thinkers are praying for takeovers to goose their shares. And there won't be any excoriation of Net analysts such as Henry Blodget, guys who basically are just doing their jobs.

The bigger issue is that this wonderful generation of individual investors will have to navigate its way through a change in what information means.

One glaring example popped up Wednesday on StreetAdvisor.com, which dutifully reported noise that Amazon.com (AMZN) is ready to launch a "huge new product line." The site goes on to report that the "hardware is in place" and that an announcement is expected "within the quarter." (Amazon didn't return a call seeking a comment.)

That may turn out to be true. It may even turn out to be great news for Amazon. You know what, though? It probably won't.

Six months ago, Amazon's announcement that it was repainting its parking lot spaces would have juiced the stock 5 points. Under the summer's storm clouds, though, Net companies' actions fail to ignite the stock, even if the moves build market share or brand or eyeballs -- or any of the other inexplicable factors they feed us.

I ran the rumor by Paul Foster, who runs 1010WallStreet.com and has been known to traffic in some "themes" himself. He summed up the situation perfectly: "Six months ago, that rumor might have been positive news. Today, when investors hear about a new product, it just means Amazon is spending more money."

Joining many others who have made the same comparisons, Foster likens Net stocks to the crazes that brought up biotech booms, casino stock scores and, of course, the rise and fall of Snapple. "There was a lot of wishing when those stocks went down, too," he says.

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Not a peep from the rumor mill on Alcoa's (AA) hostile bid for Reynolds Metals (RLM) Wednesday morning.

JagNotes came close Aug. 9 with the sage words that Alcoa would acquire Alcan Aluminum (AL) for a 10-point premium over the company's 30-buck share price. (Alcan, of Canada, is in talks with France's Pechiney and Switerland's Alusuisse Lonza.)

Five days earlier, it said Alcoa would buy Titanium Metals (TIE) for 22.

Well, at least Alcoa is making a bid for someone.

Foster says Reynolds options activity was more than double its typical numbers Tuesday. Still, the jump was to 1,700 contracts traded from 600, so it was a tough one to spot, typically too small to make it onto the most-actives list.

"It was a clean deal," he says, before warning to watch for more consolidation whispers in the sector involving names such as copper producer Phelps Dodge (PD). "The theme will be to diversify risk [among commodity types], and that perception will start showing up in the next few weeks."

Miss of the Week The pundits at StockRumors.com first mentioned a takeover bid for Ocular Sciences (OCLR) July 23 with the shares at 20 3/16. They mentioned it again Monday, essentially making them wrong for about three weeks, during which the stock has slipped about 5%.

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