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Is the Next Dot-Com Wave on the Horizon?

By: Kingston J. Amadan

The Dot-Com rise and fall of the mid to late 1990’s made multi-millionaires out of many and lost collective billions for many more. Resulting from the overvaluation of .com entities, investing (and eventual loss) was so drastic that it all but dwarfed the rise of the internet as a viable business platform for a few years.

The internet based business boom of the 90’s saw more than a few “dot-coms” take off, go public and make a ton of money for anyone adventurous enough to buy into the initial public offerings. Behind companies like Google, Yahoo, Ameritrade and many more, investors realized serious profits and began to pour more and more into the net. Lending institutions invested heavily as did garden variety long term individuals, day traders and just about everyone with a pulse on the stock market. Then, the bottom fell out for most .com stocks, with several going under.

Since that time, we’ve seen multiple new online ventures become successful, such as “YouTube” and “MySpace”. We’ve also see the rise of social networking and peer sharing in terms of video content and other newly popular online assets. In all, advertising across the major search engines is up from previous years and shows no signs of slowing down. This is a good indicator of the health of the internet, as business will not increase advertising expenditures without a favorable return on investment.

So…are we heading into the next “Dot-com” wave? Will the internet’s slow but sure increase in business involvement start another free for all where everyone wants to get a piece of the pie? That’s unlikely, but investing in non-publicly traded internet based business is becoming a popular option for private lenders and private businesses who want to expand and diversify.

For the individual investor, the sting of what happened in the not too distant past is a little too fresh to bear. It’s not that there aren’t individuals willing to invest in more internet based businesses, just that few are publicly traded which have reasonable stock prices and a favorable forecast for future performance. Unlike that time period, the deals aren’t as good and the uncertainty is even more apparent. As for going with proven “e-stocks”, the prices for those which have succeeded may have made it all worthwhile for some, but are prohibitive for most today. Additionally, no one knows how much higher if at all they will climb in the near future. Google isn’t exactly a steal these days at over $600 a share.

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