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1999 Again for Internet Momentum Favorites

|Includes: Apple Inc. (AAPL), AMZN, CRM, FFIV, NFLX, YOKU

 Are you old enough to really remember the crises of 1998 that included LTCM and the Asian tigers, and then the Y2K scare of 1999 ?  We had a remarkable market crash in the Fall of 1998 which was followed by Mr. Alan Greenspan doing what he did best, pump the markets full of liquidity to save asset prices. 

The result was the Internet stock mania of late 1999 and first quarter 2000. Mr. Greenspan's money had to go somewhere, and it went into asset speculation. Into the sector most concentrated with investor interest at the time. We called it a paradigm shift, but in essence it was a speculative fever just like countless ones before it. 

Shift to late 2010, and we have QE2. We have a new sovereign credit facility being contemplated for Europe. We have government and central bank intervention every waking moment of every business day around the world. These interventionists want one thing, for asset markets to rise to solve their debt problem the old fashioned way. 

When push finally comes to shove, and it appears to have started again in September with Mr. Bernanke's announcement of $600B of Treasury bond buying, with some sources speculating it could be $900B. We have new temporary social security tax cuts contemplated as well as tax rate extensions for those job creating elites at the fat tail of the income distribution curve. As a nation we went to the polls in November to send a message of fiscal responsibility, and what we have instead is MegaStimulus II, our asset market speculators dream of infinite money at zero cost looking for a home. 

It isn't much of a stretch of the imagination to see the potential for key internet centric stocks that have been favorites for the last several years take a lions share of speculator attention in the next several quarters, should a frenzy of unbridled greed again visit our US stock market. Names like Apple, Netflix, Amazon, Priceline, Salesforce.com, F5 Networks, and others in foreign hotspots like China. Baidu, as well as some new names like Youku.com and DangDang are giving that same flavor of IPO frenzy we last saw in 1999. 

This group is red hot for the simple reason that they can grow exponentially by taking market share from existing competitors in a stagnant economy. Why its almost like a paradigm shift, not merely another speculative fever. I wonder what Goldman Sachs had to say about the valuation of Youku.com this week as a lead underwriter. My thesis is simple, this group will receive an outsized share of attention from frenzied asset speculators during the next two quarters in a replay of 1999. It remains to be seen if the situation is aided by a rout in the bond market or a currency market crisis in a "flight to safety" in stocks by desperate Europeans or bond shocked American retail investors. 

Everything is new again in the land of perpetual monetary disorder.