OnSale Off Sale

I had expected great things from Jerry Kaplan’s company, Onsale. Online auctions represented a new way to connect buyers and sellers like no other. Moreover, I liked Jerry’s approach toward business to business marketing. Onsale wasn’t just a bulletin board of items in a public garage sale.
The company had its IPO debut in April of ‘97, stumbling out of the gate at $6 and bumping along into the summer. In the fall I began to buy shares, but the volatility scared me. I tried to pump the cycle, buying in when it dipped into the low 30’s and selling around 45. As usual, my timing was … inaccurate.
I’d been watching the stock when my brother called from Minnesota the day after Thanksgiving. I mentioned my theory and associated troubles.
“Well, it’s at 62 now,” he informed me, “and rising.” What? After I put the phone down, I watched it rise again. As it breached a hundred, I thought of a play. I couldn’t buy many shares at that price — unless I used my margin account and leveraged my way in. It was scary, yet the stock kept going up.
Until it went down, plummeting to less than fifty once again within an hour. What the heck was going on? I looked for news on the company; none. I couldn’t find any reason for this shocking volatility.
Then it hit me. The day after Thanksgiving was a holiday for the professional traders. Bidders in this frenzy were the home traders like me, making hunch bets and hoping for quick wins. While I seldom saw logic in normal market trading, today showed a complete absence. It was as if we had broken into Wall Street after hours and were running amok on the trading floor! Oh well, the parents would show up Monday and clean up our mess. I breathed a sigh of relief that I hadn’t bought a $40 stock at the “exhuberant” price of $110.