Sometimes it seems to me like the Internet brings out the worst in people. And I'm not even thinking about niche porn sites, or electronic blueprints for explosive devices, or tedious company websites selling soft drinks or cookies (do you know anyone who'd voluntarily check out the Nabisco website...?)

In my opinion, the most detrimental effect of the net is the unreasonable polarization the stocks of the leading Internet companies have created among investment advisors and editors.

Now, I've been working in this business for over ten years. In that time, I've had the pleasure of working with some of the keenest and sharpest minds in the financial information industry.

But something I was never able to get used to was the degree of visceral response some editors and analysts allowed themselves to get caught up in. (I've seen some of them recommend short sales of airline stocks because the lettuce in business class was wilted on their last trip...)

Visceral response tends to trigger actions that you would have avoided if you had applied cold, clear reason.

Take Internet stocks, for example.

Over the last 3 years (ever since Netscape's sudden rise triggered an endless barrage of "The Next Netscape" headlines), I have read, listened to, and tried to forget the words "tulip mania," "South Sea Bubble," and "irrational exuberance" a thousand times over -- mostly uttered by static contrarians who've systematically missed out on each major spike in the bull market...

At the same time, thousands of wide-eyed cocktail waitresses and busboys are making a killing on Internet stocks... which, for every red-blooded contrarian is a sure sign that they're headed for the tubes.

I'd be the first to state that Internet stocks are too hot for me right now. But given their unpredictable performance, I'd rather hedge my bets. Because more money has already been lost as Internet stocks went up than will be lost when they crash and burn.

Take this case: Early last fall, an editor I know recommended shorting AOL. The stock doubled, tripled, quadrupled, quintupled... and was still heading for the stratosphere. Those who took his advice and didn't cover their positions early on could have lost up to 1000% of their investment. (Small solace that later on the guy was born again as a "technology expert" who then went long on AOL... just a day before the stock price tumbled by 50%...)

Shorting stocks requires more than just a hunch that a trend is about to reverse. It requires a more-than-average capacity to assess risk, analyze a company's financials, and figure out the true position of a company, its products, and strategies within its respective industry.

After all, shorting a stock means that your downside is unlimited (whereas you can "only" lose 100% of the money in a speculative investment) while your upside gain is limited to the double digits.

In fact, there is only one man who I trust to pick the right stocks to sell short. His name is Will Lyons. He is the editor of a small, exclusive letter by the name of Short on Value.

And over the last couple of years, he has developed the concept of borrowing a stock at a high price in the hopes of buying it low (and pocketing the difference) from a high-risk emotional crapshoot to a rational, nearly systematic approach that boasts a 98% accuracy.

More information on his system can be found in the U.S. print edition of Taipan. If you live outside the U.S., you can email us and we will send you more information. For a free peek at Will's investment philosophy, click here to read his special report, FOUND MONEY: Seven "Dog" Stocks Ready to Roll Over in 1999.

We hope to feature occasional contributions from Will in the upcoming issues of Taipan... just in time for the summer.

Cordially,

J. Christoph Amberger
Publisher, TAIPAN