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In the latest issue of Business Week it was mentioned that ‘Internet Software’ was the poorest performing sector in the last month, down 15.1%. (Business Week; February 6, 2006; pg. 98; Personal Finance – Figures of the Week). And here I am talking about the next bubble.

So to defend my latest statements (bubbilicious series) I set out to do research on what exactly was going on. Well, that was quickly halted when I realized I was unsure of BW’s definition of ‘Internet Software’ was. For instance I consider SalesForce.com internet software whereas Google I would consider as ‘Internet Services’.

Anyway I think Wall Street is figuring out that they are over-valuaing certain companies (ahem, google). Or it could be a pre-emptive strike by investors. Or, it could be the natural course of the market. Companies are releasing lower profits than predicted and are predicting lower profits than predictions predicted (that was a mess). Anyway what do we make of all this? I am not sure yet. It’s hard to understand how a company like Google can announce an 80% profit increase over the last year and take a major hit on its stock valuation. I think the slump will even out over the next month and we’ll again be hearing about Google hitting $2000/share.

Will this affect my view of a next bubble? No. A bubble does not have to be reflected by over-valued stock predictions. A bubble can be reflected by a Yahoo purchase of Digg (example). Remember, this time around it may not be the market that creates the phenomenon, it could be GYM and VC competition.

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