Stock Watch: Online Banking Stocks Crumble

Just one day ago, I noted the astonishing run-ups in two online banking stocks and warned investors of the potential perils of putting their money in these companies. But even I didn’t expect to see a bloodletting like what happened on Wednesday.

Netb@nk (Nasdaq: NTBK), which gained 76-33/64 to 235-1/64 on Tuesday after announcing a 3-for-1 stock split, gave back 63-1/64 on Wednesday, falling nearly 27 percent to 172. Meanwhile, Florida Banks Inc. (Nasdaq: FLBK), which rose 22-3/16 to 33-1/14 on Tuesday, after announcing it would offer full-service online banking in the third quarter of 1999, gave back 14-1/4, falling nearly 46 percent to 17.

Yes, both stocks closed Wednesday higher than they closed Monday, but this is the kind of volatility that can cause heart attacks. Investing shouldn’t have to be this scary.

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