Stock movements don’t always seem to be as transparent as many investors or market experts hoped that they would be. Countless times, for no apparent reason, a stock price might jump 100 percent and traders watching the movement would have no clue what happened or why this rally has taken place in the case of no news or press release.
Several factors include the concept of insider trading, shorting, or many investors are unaware of company’s partners or relationships to sectors that have done extremely well and released news that could impact such companies.
This leaves investors and traders to speculate on what is going to happen. Many investors get a buzz, or a tip that a certain sector is going to take off. Much like the internet boom of the 1990’s, people were investing money into thousands of dotcom companies thate were poised to be the next big thing.
Times were flying high in the 90’s, people everywhere were jubilant and worth considerably more than they had anticipated because of the immense gains seen everywhere throughout the marketplace. With that said, investors were looking to capitalize even more by looking towards companies that might be associated with the internet space in order to achieve greater gains.
Companies that were related by association were supposed to be another one of Willy Wonka’s golden ticket. This was a chance to double, triple or even quadruple the money they were willing to invest.
A certain company that comes to mind is Corning Incorporated (NYSE: GLW), which was traditionally an American manufacturer of glass, ceramics, and related materials primarily for industrial and scientific applications.
In 1970, the company established an interest in Fiber Optics, and by early 1990 became the world leader in fiber optics. The speed at which information travels through fiber optics made this a company somewhat related to the Internet by home much this technology could increase data transfer rates.
This helped spark investor awareness, and around 1998, somewhat nearing the high point of buying during the dot com bubble, investors started putting a lot of money into corning, hoping to benefit on the relationship between fiber optics and the Internet. Trading skyrocketed towards prices over $100.
Traders didn’t understand what was driving this stock price so high, although they understood the relationship; it was just trading too high for their liking. Stock shorter’s were getting killed betting that this company was over valued, overbought, and was surely headed for a serious correction. It never happened, and people couldn’t understand why this company was doing so well when it was usually only dot com companies that were seeing dramatic stock upturns like Corning. Eventually, in the bust of September 2000, it all came crashing down and nearly all investors were jumping ship.
New waves like this are happening all over the place. You see this happening in the microcap arena in today’s markets.. Companies from all over the world that trade in America’s exchanges are experiencing gains in its share price and investors once again have no understanding to the cause.
Today, Media is taking over the playing field of the Internet, much like that of the dot coms. In China, media companies are developing platforms on 4G, and throughout the Internet companies are trying to produce more media, make it more appealing, and capabilities to deliver it to you faster.
Companies like ESPRE Solutions (OTCBB: EPRT) has been moving all week long. On August 13, 2007, the company’s share price started rising and has been increasing this week with no news out at all. Shares are near 15 cents, which is a 50 percent gain since Monday’s open.
The company is a media solutions company and video technology company, which provide narrow and broadband video solutions for integration into traditional voice and data applications. The company also partners with a few IP solutions, mobile and media based companies to help develop and improve each other products.
On Monday, Global IT Solutions announced that its Video Solution would be used in Oracle Communicator, which is a simple based PC softphone client. Based on the movement in ESPRE, you can see that investors are once again looking for related parties to help get ahead in the market.
This time though, investors should be weary of shorting the media companies, whether large or small. We are in another period of change, but this time it’s happening with media. New sources and mediums are available to provide you with the content you want most. News is going though the internet in a media type form, and even cell phones are being able to broadcast different forms they are interested in viewing.
The shorting opportunities will look available; companies will appear to be overbought once again as with Corning. Corning outlasted several periods of shorter’s attempts to gain on an overbought period, but were bailed out by the bust. You could see that because Corning has once again rising in price and has been on an uptrend following the day it bottomed out.
Investors should learn from their previous mistakes, and capitalize this time around by sticking with the media companies. They will provide gains as more companies look for ways to get in on the future of internet, television, and how everything will potentially be wireless. ESPRE, who is on the forefront with its technology, is in line to help several different companies exceed and potentially gain from the boom new media will provide so shorters beware, don’t doubt new media.