Dot-Com Mania Strikes Again

It ain’t 1999 anymore.

But while you have a minute this morning, let’s check up on some of the dot-com darlings of the new century.

Let’s see…

Online review hub Yelp Inc. has jumped 263% so far this year.

Real-estate listing site Zillow Inc. is up 211%…

Internet radio pioneer Pandora Media has risen 176%…

And this is just a small handful of this year’s incredible gains from the big names among Internet and social media stocks. What’s even more impressive is the dips these stocks have avoided along the road. The broad market has hardly traveled up in a straight line this year. Yet these dot-com darlings have powered over every pullback. Frothy doesn’t even begin to describe it…

Nasdaq Internet Index (QNET) vs. Nasdaq 100 and S&P 500 since 3/9/09

“The Internet group has had a pretty amazing run during this bull market, and it has been accentuated by humongous gains in 2013,” explains a note from Bespoke Investment Group. “The Internet index is up 387% over this time period, compared to a gain of 207% for the Nasdaq 100 and +150% for the S&P 500. So far in 2013, the Internet stock index is up 48%!”

Crazy.

Sure, many of these Internet names have been cash machines this year. But you can’t expect this kind of performance to continue. Even if the broad market does plow higher, I would expect to see some profit taking among these stocks.

If your investing horizon is longer than a couple of days or weeks, don’t get suckered into these stocks right now. Even if you’re trading, plan your entries carefully and keep ‘em on a tight leash.

Greg Guenthner
for The Daily Reckoning

Ed. Note: Need help getting into the trading game? In this morning’s Rude Awakening email, Greg offered readers an opportunity to learn how to make an additional $100 in trading income every day for the next 100 days. If you didn’t get that email, not to worry. You can sign up for FREE, right here, and make sure you never miss another great opportunity like this one.



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