CollingeThe Wheel of FortuneAccording to Zen Buddhisim, the wheel of fortune rotates and the ones who are now poor will be rich in the future and vice versa. The stock of America Online, symbol AOL, is a perfect example of this belief.Earlier in the year, AOL was the hottest stock on Wall Street. Every analyst loved it, saying things like ‘if you want to play the Internet, buy AOL because they are the best of the best’. The stock doubled in the first four months of the year. At one time in April, the stock set unprecedented 18 back-to-back (!) all time highs. Everybody thought the stock was going to the Moon. The stock surpassed IBM in the market capitalization and Steve Case, the AOL’s CEO, was on every cover of major business magazines. The stock reached the price of $175 per share in the middle of April. On April 20, something strange happened. AOL closed down for the day, for the first time that month. People was saying “don’t worry about it, it’s just some profit taking”. The following day the stock dropped again. Than the news broke out that the subscribers growth was unexpectedly slowing down. The stock dropped even more. In early June the bad economic numbers came out and suggested that inflation might be coming. Since AOL is an interest rate sensitive stock, the prices dropped even more and reached $120 per share at the end of June.But, the struggle wasn’t over yet. In early August, Microsoft announced that they plan to give away users a free Internet access if they use their products. This was a low blow for AOL and the stock plummeted from $100 to $75 per share in just one day. Institutions were selling their AOL positions like there was no tomorrow. There was 43 blocks of 100,000 shares or more sold in just one day. The stock was trading at $75, which was actually the same level from where the stock began its run in January. The following day, all those op...
