Complete Idiot’s Guide to Investing in Internet Stocks

Comments

1. Joyce says

   December 20, 2009 at 8:53 pm

   Taking people with little investment experience and little technology knowledge and teaching them a little about investing in Internet stocks is inappropriate at best. That’s like entering elderly people who move slowly into the running of the bulls in Pamplona. People are going to get hurt. Avoid this subject, and this book.

   Here are some of the observations the author makes. “Investing in Internet stocks makes good sense.” “With information, intelligence, and patience, you will be successfully investing in Internet stocks.” “Investors willing to step out just a little on the risk side may find the rewards outstanding.” Well, since the book came out, owning any of the Internet stocks has only led to losing a lot of money.

   Why then did a rate the book at 2 stars rather than 1? Well, it does have some cautions in it. “Don’t put your life savings into Internet stocks . . . .” Amen! You are encouraged to buy quality companies, hold the stocks, keep your expenses low, use mutual funds, watrch your risk (based on your stomach acid levels and sleepless nights), diversify, and have fun. Well, you would have been out of Internet stocks before the book came out if you followed that advice literally.

   Many Internet companies are going out of business as they run out of cash. To the book’s credit, this risk is finally pointed out briefly on pages 183 and 184.

   Naturally, if many stocks were going to fall 50-99%, this was a great time to sell the stocks short. This is first mentioned briefly as an opportunity on page 147. But brand new investors should not be selling short in volatile categories.

   Here’s my advice. Buy a lottery ticket instead. You have the same chance of making money, and because the unit cost is smaller, you will lose less money.

   Stick to things you know where the odds are in your favor. Read Common Sense About Mutual Funds by John Bogle instead if you want a useful perspective on how new investors can make money.