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Have you got Net fever yet? It’s hard to resist.

Last week, shares of eBay Inc., the online auctioneers, leaped 37 percent. If you bought 1,000 of them when they debuted four months ago at $18 a pop, you’d be sitting on a little over $303,000 today. Amazon.com continues its joy ride: The company has a market cap of $20 billion (not bad for a company that hasn’t made a profit yet). America Online shares have split six times since the company went public in And let’s not forget Yahoo!, which last week announced that it was going to buy GeoCities Inc. in a $3.9 billion stock swap. (Not bad for a company — Geocities — that had a net loss of $6.9 million in 1997 and another loss of $19.8 million in ’98.)

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I know greed is good — ask Deng Xiaoping or Gordon Gecko — but just what is going on here? Even Bill Gates recently said he thought that the values of Internet shares had gone out of control.

The prospect of easy money is part of the allure. Hype the information revolution enough, salt a few megadeals and everyone with spare change and a modem wants to be a billionaire. Investors tell their brokers to get a piece of that IPO and price be damned. That accounts for a lot of the demand that is ramping shares into the stratosphere.

Alan Greenspan, the chairman of the U.S. Federal Reserve Board believes there is more to this roaring bull market than overheated investors. Last week, he told the U.S. Congress that “the issue really gets to the increasing evidence that a significant part of the distribution of goods and services in this country is going to move from conventional channels into some form of Internet system — whether its retail goods and services or a variety of other things.”

The Great Mystifier — famous for his comment “If I have made myself clear, then you have misunderstood me” — followed that up with a warning: While some of these companies will succeed, “the vast majority are almost sure to fail. … When you are dealing with stocks … you get a premium in that stock price which is exactly the same sort of price-evaluation process that goes on in the lottery.”

That’s reassuring.

But soaring prices are also being fueled by changes in the nature of trading itself, an evolution that is being pushed by new technology. Just about anyone can go online and play Wall Street Wizard. That puts a lot more money and a lot of volatility in the market.

About one-quarter of all retail stock trading takes place on the Internet. By one estimate, there were 1.5 million online trading accounts two years ago; the same forecasters say that number had reached 5.3 million by the end of 1998 and controlled $233 billion in assets. By 2002, there will be 14.4 million accounts, controlling $633 billion in assets. That may not be a lot compared to the big institutional investors, but when it is focused on hot issues — and the money seems to focus on the smaller, technologyintensive NASDAQ exchange where many new companies list — it can move markets mightily.

The fever is getting worse. Research shows that trades on the Net increased by 34 percent between the third and fourth quarters of last year. On average, there were 340,000 trades a day.

Some of the big online stockbrokers, like Charles Schwab and Waterhouse Securities are increasing margin requirements — the percentage of equity a trader must keep with the broker — for hot Net stocks to dampen some of the enthusiasm.

Finally, there are “day traders.” These are aggressive individual investors who spend the day glued to their monitors, trying to make a killing or just stay ahead of the game. Nobody can say with any confidence how many day traders there are, but they seem to have established a real presence on the Net. And, they seem to be focusing on the high-tech stocks.

Day trading is a risky business. Last week, one of the first studies of day trading was released and it ain’t a pretty picture. According to the report, 58 percent of customers lost money within the first three months of trading, and the average loss topped $21,000. The other 42 percent made an average of $36,000.

There is a learning curve, though: After three to five months, nearly two-thirds of day traders (65 percent) made an average profit of $28,426. The remainder lost a little over $6,000.

Just before Greenspan spoke last week, Arthur Levitt, chairman of the U.S. Securities and Exchange Commission, warned about the dangers of being sucked into the Internet hype. His agency has had a 330 percent surge in complaints about online trading, fueled by the prospect of surefire, get-rich-quick schemes.

His message was pretty simple: The economy may change, the trading medium may change, but the investing fundamentals remain the same. Don’t be seduced by the ease of investing, the headlines or your friends bragging about the killing they just made. Invest for the long-term, “not minutes or hours.” Don’t play with money you can’t afford to lose.

Simple words of wisdom. They probably won’t suffice when the call comes.

(Brad Glosserman)