contrarian etf investing?

[markowitzman]

Best-performing ETFs of 2006
ETFReturniShares FTSE/Xinhua China 25 Index FXI68.5%iShares MSCI Spain Index EWP48.1%Internet Infrastructure HOLDRs IIH47.4%iShares MSCI Sweden Index EWD44.3%iShares MSCI Mexico Index EWW40%

Worst-performing ETFs of 2006
ETFReturnInternet HOLDRs HHH-18.7%B2B Internet HOLDRs BHH-15.4%Broadband HOLDRs BDH-14.4%Biotech HOLDRs BBH-8%Semiconductor HOLDRs SMH-7.5%

With so much growth in online shopping is it time to relook at the internet sector post the bubble/crash?

 

[GeneralZod]

As someone that works in the Internet/Telecoms sector for 10+ years and dumped his shares avoiding the worst of the May 2000 crash I'd say no.

We just saw Google pay $1.6 billion in shares for YouTube. Great site but something that could be copied for a hell of a lot less than that.
Point being there seems to be a return to the bubble behaviour.

The Time Warner AOL merger of a few years ago was another obvious failure waiting to happen given AOLs lack of control of the access network.

They're describing the Lucent Alcatel merger as the Americans' revenge on the cheese eating French. The frogs would be better off without them as they've already got an excellent set of products.

We just saw Siemens divest itself of it's loss making telecoms division in a joint venture with Nokia. The germans have the best engineers by far but they're lacking in their own products.

There's all those 3G licences out there too that will have a return on investment some time in the next millenium. 3G is hyped well beyond its capabilities. It costs a fortune to roll out and it doesn't have a killer app.

The latest buzz is IPTV but this is high risk. At lot of money is going to be sunk into it without any real confidence its going to work.
I suspect the consumers will benefit more from this investment than the service providers as it will wind up funding
huge upgrades in Internet download speeds and there'll be a race to the bottom on access costs. I dimension core networks in my day job and the bandwidths required are breath taking.

I suspect that Internet/Telecoms is like the Airline industry - not a good long term investment.

Still there's enough work going round to keep me in a job.

 

[markowitzman]

I was thinking in terms of the online retailers and auction sites which are growing year on year. Agree on telcos. HHH etf specifically.