The Seduction of Internet Stocks

Everybody knows somebody who has made a killing on Internet stocks. Maybe it was a co-worker, a cousin, or a friend. Maybe it was Yahoo, Ebay, or Priceline.com. Informed investors certainly understand that these Internet stocks are extremely volatile and only suitable for aggressive investors - very aggressive investors. Unfortunately, a lot of otherwise conservative investors are being lured into these risky stocks.
	TO THINE OWN SELF BE TRUE. Determining your tolerance for risk and your investment objectives are two of the most important decisions an investor has to make. The purpose of that self-evaluation is to steer investors toward investments that are suitable and appropriate for their personal situation and objectives. Internet stocks are not conservative investments by any means. That doesn`t mean that Internet stocks are bad investments. It just means that Internet stocks are inappropriate for conservative investors. While the 100% (or more) gains in some Internet stocks may look alluring, you have to understand that these stocks have the potential to go down just as fast as they have gone up. There are also many examples of "dot-com" stocks that have fizzled right from the start. For investors with a stomach lined with iron and a long-term time horizon, Internet stocks may be something that you might want to consider.
	JUST A LITTLE…FOR SPICE . Even if you are an aggressive investor, and have the financial where withall to take some risks, you should keep your Internet exposure limited to a small portion of your portfolio. That means that if you were fortunate enough to hit a home run with an Internet stock that you should probably sell some of it to re-balance your portfolio.
	WHAT ABOUT INTERNET FUNDS? No one knows whom the ultimate winners in the Internet sweepstakes will be. Some companies will prosper while others will tumble into oblivion. That is why it may make sense to substitute a professionally managed Internet fund instead of individual stocks. The Internet is here to stay and Internet stocks/funds are an exciting option that may have a place in your portfolio. Bear in mind that mutual funds involve market risk including fluctuating returns and possible loss of principal, and that sector funds, such as Internet funds, may involve additional risk as well. You`ll want to discuss the possibilities with your financial professional.

Past performance is no guarantee of future results. This material is provided for informational purposes and is not intended to provide specific investment advice. Rather, it is intended to be educational and supplemental to an ongoing Investment Advisory relationship. It contains our current opinions and those are subject to change.

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