Internet still falling

I posted a similar chart some weeks ago but this is not a chart you often see. The NASDAQ and DIA are climbing and the Internet bellwethers are falling. Normally the volatile Internet stocks climb faster than the indexes and fall quicker.

I know that GOOG and YHOO has specific reasons for some of their fall but eBay's last earnings release was perfectly respectable and it has still been caught up in the decline.

In fact the decline in eBay's PE ratio over the last few years has been quite startling. Through most of 2004 the trailing PE was over 100. Then came the crash of January 2005 which took the PE down to about 70. Now over one year after the crash the PE has decayed to 50.

So what is it with Internet stocks? Perhaps all the excitement over GOOG in the last year has put eBay in its shadow. Now GOOG is out of favour it has taken the market down with it.

An example of some of the rubbish that gets written about eBay is here. The analyst suggest waiting until Q4 2007 to look into eBay! Why? The analyst also suggests that the SP will be range bound through the summer. Why? He then mentions eBay's "premium" valuation but actually eBay is a lot cheaper than YHOO and half the price it was 18 months ago.

I would like to bet half my portfolio that eBay will trade outside the $35 - $45 range before the end of the summer!

These are tough times for Internet investors like me. But there have been tough times before and there will be again. When sentiment finally changes I will be laughing.