Contrarian Stock Market Investing News - Featuring Bargain Stocks » TMT http://www.contrarianprofits.com Access market-beating ideas from the world's top investment gurus on stock market investing, the gold market, ETFs, Forex trading and real estate values. Mon, 10 May 2010 15:10:45 +0000 http://wordpress.org/?v=2.8.5 en hourly 1 Bubble Babble http://www.contrarianprofits.com/articles/bubble-babble/2859 http://www.contrarianprofits.com/articles/bubble-babble/2859#comments Thu, 05 Jun 2008 18:23:17 +0000 Ajit Dayal http://www.contrarianprofits.com/articles/bubble-babble/2859 Everywhere I look, I see the word “bubble” – quickly followed by the word “burst” or “deflate”. So what exactly is a “bubble”? Well, it used to be the sort of thing that one had in a hot tub bath when there was a lot of soap.

But now water is not always available 24 hours a day and it is sort of wasteful to have a “bath tub” bath. A quick shower will do.

And the price of oil and coal and electricity is also “bubbling” – that makes the hot tub bath an even more expensive experience.

And in everyday life, “bubbles” may still be the pet name that many north Indians prefer to an alternative like “tinkoo” or “pinkoo”.

But, in…

]]> Everywhere I look, I see the word “bubble” – quickly followed by the word “burst” or “deflate”. So what exactly is a “bubble”? Well, it used to be the sort of thing that one had in a hot tub bath when there was a lot of soap.

But now water is not always available 24 hours a day and it is sort of wasteful to have a “bath tub” bath. A quick shower will do.

And the price of oil and coal and electricity is also “bubbling” – that makes the hot tub bath an even more expensive experience.

And in everyday life, “bubbles” may still be the pet name that many north Indians prefer to an alternative like “tinkoo” or “pinkoo”.

But, in financial jargon, “bubble” means something that is inflated and – like your bath soap bubble – eventually goes “phut”.

Investing – avoiding the bubbles.

Here are some stocks that were very popular and were owned by many portfolio managers and mutual funds and then, in true bubble-like fashion, went “phut”.

Yahoo! was quite the junglee of the technology bubble (circa 1998 to 2000).

The company still has a product that is widely used so while the bubble did deflate, the company has still managed to grow.


Source: Bloomberg

For all its “bubbliness” Yahoo has grown sales by a very respectable 45% each year since the year 2001 and the stock is up some 5x in 6 years. Of course, if you were the unlucky enough to buy it in March 2000 at about USD 100 per share, well you are still sitting on a 75% loss, eight years later.

In India we had our share of TMT bubbles. For those old enough to remember (and young enough to recall) there was Himachal Futuristic – the darling of the stock market and a media favourite. Well, they ran into a rough patch. An investment in HFCL in March 2000 would still leave an investor deep in the red today.


Source: Bloomberg

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