Post of the Day
November 17, 1998

From our
theglobe.com Folder

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Call this series of posts...

 

The Lost Weekend

The panic begins:

(Post 1)
Subject: tglo 350 shares bought -

o.k. , so now what do I do? I bought 350 shares of this stock [theglobe.com] at $89 a share. This is going to set me back years. I bought ewbx at 48 and sold at 76 so I thought this would be the same scenario. Do I just sell it Monday AM ASAP or do I wait and see what happens with the opening? Can I short it? Or will this rocket like exbx? Any help or thoughtful insights appreciated as I am understandably very anxious at this time.

Panic becomes fear:

(Post 2)
The part that I don't get...Could this stock open on Monday at 75 and go down to 22 or something crazy like that? How do I know when to sell it? Did anyone buy ebay? Did that start off high and then go low and then come back up again? I am pretty scared and if I wait a month could the company be out of business? Am I overreacting here? What would you do in my situation?

Fear begets desperation:

(Post 3)
PLEASE IF ANYONE ELSE HAS ANY THOUGHTS ON WHAT TO DO I REALLY DO APPRECIATE YOUR FEEDBACK.
If this stock opens at 50 could it go to 22? What should I do Monday AM? Should I immediately sell it at a loss? Some of the news is encouraging...last trades 75-90, no war for the US, but will I have squandered my entire retirement savings? How do I handle this one? Any more ideas much appreciated and I promise to never live on this side of risk again.

Relief and repentance:

(Post 4) Thanks for all of the feedback.
I'm glad to be out of the stock. Sold it at 70 and at last check it was at 56. WHEW Great advice from everyone and much appreciated. I am fervently reading The Motley Fool Investment Guide and with more info know I will make better decisions in the future.

Back to basics:

(Post 5)
I share your sentiments about the last weekend with being physically ill over this stock purchase. Now the question is what intelligent way can we recoup the money lost? I just can't believe the relief I feel in not owning this stock anymore. Thanks for sharing your story and quick rebound

Revenge!

(Post 6)
That is my question. Can you short these new stocksor is it a rule that you have to wait 30 days? If we could short it we could make the money back on the next losing proposition that we could spot next time. Please let us know the rules here. THANK YOU!

An education begins:

(Post 7)
The only hopeful news that I saw on this was that there would be a news story on it tonight due to how fast it shot up. Hopefully, for those still in on the stock this will attract much attention and drive the price up again. I hope so for those that didn't get out of it this morning. I had NO knowledge about Earthweb and made great money on it, but I now understand that it was just beginners luck and boy have I been reading alot this weekend. I now know the difference between TRADING and INVESTING and all I had to pay for it was $$$$$$ What I finally realized about the globe was that there was really nothing there to get excited about so I really didn't want to wait for them to come up with some profitable ideas, which could take years. Time is money. I think the same things were said about Ebay and look where it is now. The only difference is that Ebay could only be profitable due to no inventory on hand, they just connect the sources. The sky could be the limit for that. GOOD LUCK I KNOW HOW IT FEELS

TMF Nico offers an analysis:

Subject: Re: tglo 350 shares bought
Author: TMFNico

The part that I don't get... Could this stock open on Monday at 75 and go down to 22 or something crazy like that?

Actually, Oslo, that is the part you DO get: The stock COULD open Monday at 75 and go down to 22. Or up to 122. Or something crazy like that.

What you are not getting -- or haven't yet gotten -- is that the same volatility you are afraid of is pretty much the only reason for you to have taken a position in theglobe.com's IPO in the first place. In a sense -- in your innocence -- you got what you were looking for.

The extreme volatility -- the wild up-and-down -- and the chance to play that volatility to your benefit, is the main attraction of a first-day Internet IPO. Taking that chance might not be especially Foolish, with a capital "F," but its a legitimate thing to do. Problem is, it can turn ugly... and panicky... and sweaty... and... you get the idea... if you are not prepared for what you've gotten yourself into. And that situation is, sadly, lower-case all the way.

How do I know when to sell it?

Well, what was it you were hoping for Friday when you bought it?

Was this money you can afford to lose? Would it be worth selling some or all of the stock at a loss just to get yourself out of the game -- although, clearly, it's no game? Are you prepared to hold onto it, and sit on the still-only paper loss, in case the stock comes back? If so, at what point would you sell? When you're down only a couple of points? When you're at break even? What happens if it DOES go to 125 tomorrow, or the next day? Would you sell it then? Or would you hold it all the way up to 150... or back down to 75?

These are some of the questions and scenarios you need to consider BEFORE you click the send button on your Buy order. No one can answer them for you. And they are especially hard to answer while the ticker is running on a fast-moving and losing position.

I am pretty scared and if I wait a month could the company be out of business? Am I overreacting here? What would you do in my situation?

As far as the company being out of business in a month, there are no guarantees, but I think that is EXTREMELY unlikely. I'd happily bet against that.

By all appearances, theglobe.com is a legitimate company, with a real product, real assets, and operating in a legitimate industry -- much as the internet permabears might like to deny that. The fact that the industry as a whole is at times overhyped, and that many internet companies are considered "insanely overvalued" doesn't change that. Unfortunately, it also doesn't mean theglobe.com's stock is either worth what you paid for it or will again be valued at what you paid for it any time soon, if ever.

My guess, and that is all it is, is that the situation will remain volatile and you'll have an opportunity to at least minimize whatever damage has been done -- which again is only on paper at the moment. The situation could well turn in your favor. So you'll have an opportunity to answer some of the above questions.

Also, as Rock1et mentioned, you should get a better sense of how markets work, and an appreciation of the risks involved. Those risks can not be eliminated. They can only be understood, at which point you can intelligently CHOOSE to either take those risks or reject them altogether.

I think you would benefit from the material available at the Fool's School. There's a lot of good stuff there. In particular, check out How To Value Stocks, and The 13 Steps To Investing Foolishly. The links are below. The Fool's School stuff might not help you much in this situation. But it'll definitely come in handy down the road. And FWIW, you shouldn't let this situation keep you from traveling down Investment Road. In the long run -- which is not really what Internet IPOs are about -- that road will take you where you want to go.

I hope it works out for you.

TMF Nico

Fool's School www.fool.com/school.htm
How To Value Stocks www.fool.com/School/HowtoValueStocks.htm
The 13 Steps To Investing Foolishly www.fool.com/School/13Steps/13Steps.htm


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